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UK Chancellor Kwasi Kwarteng is flying back to London for crisis talks with Prime Minister Liz Truss amid turmoil in the Tory Party and intense speculation he will have to dismantle key elements of his controversial mini-budget.
Kwarteng cut short his visit to the annual meeting of the International Monetary Fund in Washington DC as Conservative members of Parliament questioned whether he and Truss can survive the coming days.
After days of chaos, there was greater calm on the financial markets following reports that Kwarteng is preparing to abandon parts of his £43 billion tax giveaway.
However, the situation remains precarious with the emergency support package put in place by the Bank of England to protect pension funds from collapse due to end on Friday.
At Westminster, there were reports of fevered plotting among Tory MPs amid suggestions that Truss's two main rivals for the Tory leadership over the summer Rishi Sunak and Penny Mordaunt could be installed at the head of a new administration.
Before he left the US, Kwarteng initially insisted he stood by his economic growth plan and would be setting out how he intended to get the public finances back on track in a statement on October 31 as planned.
However, few MPs believe he can afford to wait that long, and in a later interview with The Daily Telegraph he said only ‘let's see’ when asked if he could ditch his promise on corporation tax.
The commitment to scrap the planned increase in the levy on corporate profits from 19% to 25% is widely seen as likely to be the first element to go if the expected U-turn goes ahead.
However it is unclear whether that would be enough to settle the markets, which have already ‘priced in’ significant changes.
The senior Conservative MP Mel Stride, who chairs the Commons Treasury Committee, said it was essential that the government acted decisively if it was to restore confidence.
‘The danger here is that they decide they are going to nibble at the edges of this and don't think that will cut it,’ he told the BBC.
‘You could end up in that circumstance in the worst of worlds that you've U-turned but it doesn't settle the markets.’
A Treasury spokesman said: ‘After completing a successful series of meetings at the IMF, the chancellor is returning to London today to continue work at pace on the medium-term fiscal plan.’
Trade Minister Greg Hands, meanwhile, refused to rule out possible changes ahead of the October 31 statement, telling Sky News the government ‘will make responses as appropriate as events happen’.
Hands brushed off suggestions Truss could be forced to sacrifice Kwarteng to preserve her own job, insisting his position was ‘totally safe’.
‘I know the prime minister has got total confidence in Kwasi Kwarteng,’ he said, adding that the chancellor was ‘an incredibly capable person, a very, very bright person who makes good judgment calls’.
Hands, who backed Sunak in the leadership election, also dismissed suggestions the former chancellor could be installed at the head of a new government on a joint ticket with Mordaunt.
‘I don't recognise that story at all,’ he said.
However former culture secretary Nadine Dorries angrily accused Sunak's supporters of agitating to get rid of the prime minister.
She tweeted: ‘They agitated to remove Boris Johnson and now they will continue plotting until they get their way. It's a plot not to remove a PM but to overturn democracy.’
By Gavin Cordon and Sophie Wingate, PA
source: PA
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