Markets price in more U-turns as Kwasi Kwarteng returns early from IMF – business live

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The pound has fallen further on the news, and is down 1.2% at $1.1190.

Kwasi Kwarteng has been sacked as chancellor after less than six weeks in the job, the BBC reported.

His sacking makes him the shortest-servicing chancellor since 1970, and his successor will be the UK’s fourth finance minister in as many months.

The Guardian’s political editor Pippa Crerar is also hearing that Kwasi Kwarteng is to be sacked as chancellor.

He arrived back in London from the IMF meeting in Washington just before 11am and headed straight to 10 Downing Street for talks with Liz Truss. The prime minister will hold a surprise press conference at 2pm.

Pippa writes:

Kwasi Kwarteng will be sacked as chancellor as Liz Truss tries to restore her political authority ahead of a U-turn on parts of her disastrous mini-budget later on Friday, according to sources.

A Downing Street source confirmed to the Guardian the prime minister intended to get Kwarteng to “carry the can” over her climbdown as she sought to calm the markets and the nerves of jittery Tory MPs.

Truss is meeting Kwarteng, previously her closest political ally and co-architect of her plan for growth, for crisis talks in Downing Street after he dashed back overnight from an International Monetary Fund (IMF) meeting in Washington.

Whitehall insiders told the Guardian the pair held different views on how far the government should go in reversing key elements of its plan to steady the markets and placate anxious Conservative MPs.

Henry Dyer, investigations reporter at the Guardian, has done this ranking of chancellors according to the number of days spent in office:

Former LBC presenter Matthew Stadlen tweets:

Over in Washington: global inflation is causing “horrifying” food insecurity, the International Monetary Fund’s Africa head has warned, who described inflation as an “insidious tax on the poorest”.

The IMF’s twice-yearly regional economic outlook released today warned that 123 million people, or 12% of sub-Saharan Africa’s population, face acute food insecurity – where the lack of access to adequate food puts someone’s life or livelihood in immediate danger – by the end of the year.

This compares to around 82 million people before the Covid pandemic, but the combined blows of the virus, spillovers from the war in Ukraine as well as worsening unrest and drought in parts of Africa have sharply driven up the numbers.

The IMF’s African department director Abebe Selassie told Reuters this week:

What worries us really is the fact that this is coming on top of all of the dislocation caused by the pandemic.

I was in Chad (in May) and really the conditions that you saw there in terms of food security really are very, very horrifying.

Ethiopia, Somalia and parts of Kenya are also on track for a fifth failed rainy season, with famine looming in Somalia.

Annual food price inflation in sub-Saharan Africa has exceeded 10% since the second half of last year, and the IMF’s new economic forecasts this week revised up its regional inflation projection by 2 percentage points to 8.7% for this year.

The fund also cut its GDP growth forecast by 0.2 percentage points to 3.6%, a significant drop from the 4.7% expansion in 2021, and has said Nigeria, Ghana, Ethiopia, Malawi, and Zimbabwe may all need to raise interest rates faster or more aggressively. Africa’s central banks are caught in a dilemma, trying to tame inflation that is mostly out of their control.

Selassie said:

It’s a delicate balancing act that central banks face. Inflation is this insidious, insidious tax on the poorest.

Rapidly rising global interest rates mean that sub-Saharan Africa’s most heavily-indebted countries have effectively lost access to the international capital markets. This has forced countries including Ghana to request IMF bailouts and Selassie said work was still ongoing to determine if the West African country now needs debt relief.

Kwasi Kwarteng has reached prime minister Liz Truss’s Downing Street office, according to a Reuters photographer.

Torsten Bell, chief executive of the Resolution Foundation, has tweeted:

Professor Costas Milas, of the Management School at the University of Liverpool, says it would make sense to stick the planned rise in corporation tax to 25% next April from 19% (the government wanted to scrap the rise, but is now expected to make a U-turn).

Whatever the fate of chancellor Kwarteng, we need to make a U-turn on the corporation tax. At 19%, our corporate tax rate is lower by as many as 4 percentage points than the average rate in the OECD economies. In fact, the UK corporate tax rate has been lower than that in OECD economies for the last ten years.

Despite this, UK business investments have not taken off. Consequently, raising the corporate tax rate to 25% will not undermine investment growth. The chancellor needs to focus, instead, on improving government effectiveness which, according to the latest World Bank data, shows that the UK is down from the top 7% of countries to the top 13% over the past five years. Doing so will boost investments and economic growth without risking our fiscal responsibility.

Our political editor Pippa Crerar has tweeted:

TalkTV’s Tom Newton Dunn has heard that the former foreign secretary Jeremy Hunt could be the new chancellor.

UK government bonds continue their rally, amid expectations that key parts of the mini-budget will be scrapped, and reports that Kwasi Kwarteng will be sacked as chancellor.

It is also the last day of the Bank of England’s emergency bond-buying programme.

The rally has pushed bond yields dramatically lower, reducing the cost of government borrowing. The two-year yield has fallen 17 basis points to 3.67%, the lowest since the day of the mini-budget, and the 10-year bond is yielding 3.96%, down 23 bps.

The 30-year yield has tumbled 31 bps to 4.28% while the 20-year yield has dropped 26 bps to 4.37%. Both surged above 5.1% on Wednesday.

European stock markets have all risen more than 1%, with the FTSE 100 in London is 1.15% higher at 6,928, a gain of 78 points.

The pound has retreated 0.5% to $1.1269.

Will he stay or will he go? Kwasi Kwarteng is being sacked as chancellor, according to Steven Swinford, political editor at the Times.

Kwasi Kwarteng has arrived back in the UK after an overnight flight from Washington. His plane touched down at Heathrow about half an hour ago.

Ben Riley-Smith, political editor at the Daily Telegraph, is tweeting that the UK government will make a dramatic U-turn on its plan to scrap the rise in corporation tax to 25% next April from 19% – but will keep the national insurance cut and 1p income tax basic rate cut.