Markets braced for PM’s news conference this afternoon: Jeremy Hunt appointed as latest Chancellor as Kwarteng steps down – reaction

by | Oct 14, 2022

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Today is turning out to be a very big day for PM Truss’ Government as some big announcements have already been made. With just hours left before the Bank of England withdraws the temporary support it has been giving to the troubled gilt market later this afternoon, the Prime Minister, Liz Truss, has announced that she will be giving a news conference this afternoon. It is expected to be around 2.30pm, although this timing is not confirmed.

It is widely anticipated to mean that she will announce further ‘U’ turns to measures announced in Kwarteng’s hugely controversial ‘Fiscal Event’ last month which spooked the markets. The big story which broke before the PM’s statement, that Kwasi Kwarteng has stepped down as Chancellor of the Exchequer at lunchtime today – a position he has held only since 6 September 2022 – following the request from the PM that he stand aside.

Kwarteng was previously Secretary of State at the Department of Business, Energy and Industrial Strategy between 8 January 2021 and 6 September 2022. He was previously Minister of State at the Department of Business, Energy and Industrial Strategy.

Also just ahead of Truss’ expected speech, it was announced that Jeremy Hunt is to become the next Chancellor of the Exchequer.


As rumours of what exactly Truss might announce this afternoon do the rounds, markets have taken some heart – especially the long end of the gilt market which has been under considerable pressure for the past fortnight.  The FTSE100 index is also in positive territory, although still below the key 7,000 level.

AJ Bell head of retirement policy, Tom Selby, comments on the decision to remove replace Kwasi Kwarteng as Chancellor: “There are two things you really don’t want to mess with as a Prime Minister and Chancellor – people’s mortgages and people’s pensions. In the space of little more than two weeks, Liz Truss and Kwasi Kwarteng have poured fuel on the fire of the mortgage market – with people’s monthly repayments going up by hundreds of pounds – and made people worry their pensions were at risk.

“In reality, of course, people’s pensions were always safe, but perception counts for a lot. This Government’s decisions caused panic in the bond markets which led to hugely damaging ‘pensions crisis’ headlines. Repairing trust and confidence in retirement saving will be a huge job on the back of this period of high uncertainty.”


Richard Carter, head of fixed interest research at Quilter Cheviot, comments on what it means for markets and investors: “Kwasi Kwarteng’s fate shows just how serious the UK’s loss of credibility with the markets was, as he becomes one of the shortest serving Chancellors in history. The market will have been craving a safe pair of hands to guide the UK through this difficult period, so it will be interesting to see how gilt yields and the pound respond to Jeremy Hunt being given the difficult task of running the public purse. How long he gets to do this for will ultimately be the next question.

“Sterling continues to be a prominent victim in this fiasco, with its value against the dollar once again seesawing on the political turmoil that is playing out. This volatility will be going nowhere until we get some sort of stability at the political level and once fiscal and monetary policy are singing from the same hymn sheet. While such volatility can present good opportunity for investors, it is key they are selective in this given how much sway politics is currently having on the UK market.

“The expected U-turn on the mini-budget policies will be welcomed by investors and the market as a first step to getting the UK’s public finances back on a sustainable path. It is hoped too that this move takes the pressure off the Bank of England to raise rates too aggressively and thereby reverse some of the extreme moves we have seen in the gilt and mortgage markets. That is not to say interest rates won’t still rise – they need to in order to help tame the inflation beast – however, the BoE should be reassured enough at this stage that it doesn’t need to go harder or extend its support to pension funds that have been caught out by the rapid rise in yields.”


Susannah Streeter senior investment and markets analyst, Hargreaves Lansdown, comments on the Chancellor’s departure:  ‘’Amid the wait for the wheels to screech on another u-turn,  the door to no. 11 Downing Street is already groaning on its hinges, with Kwasi Kwarteng exiting the Treasury. The finger of government blame was pointing straight at the Chancellor as soon as he was ordered to dash back to from the US a day early, going straight from arrivals to a humiliating departure.  His promise of a medium-term fiscal plan to be delivered on Halloween did not provide enough reassurance that the government was in control of economic policy and investors showed signs of taking fright again. But Liz Truss is still facing a rocky horror show of her own making, given that the UK is still hurtling back into a 1970s time warp. Even if this embarrassing reshuffle is accompanied with a fresh reversal of policy, as far as the credibility of the government is concerned, significant damage has been done. There will be a long way to go and significant bridge building ahead before the UK risk premium disappears. The cost of government borrowing fell  further earlier, with gilt yields dropping as speculation swirled that there would be a change at the Treasury, an indication that investors in the UK might welcome this change to the front seat line up. But since his departure was made clear, 10-year gilt yields have edged up slightly and the pound fell below $1.12, with no fresh euphoria in sight as markets digest another bout of political upheaval. For now the Prime Minister has won breathing space, but the financial markets are highly sensitive and anything less than a co-operative approach with the Bank of England, the Office of Budget Responsibility and international institutions could cause fresh instability.’’

Sir Steve Webb, Partner at LCP and former Pensions Minister has commented on his Twitter feed: “It literally doesn’t matter who the PM appoints as Chancellor. She will be gone in weeks and the new PM will presumably appoint another new Chancellor…”

George Lagarias, Chief Economist at Mazars comments: “Chancellor Kwarteng’s defenestration may provide some short-term support for Pound Sterling, but Ms Truss’s conundrum remains. Enacting her economic growth vision at a time when financial markets are rejecting the idea of higher indebtedness is proving a very difficult riddle to solve. Investors will remain skeptical for the foreseeable future. We must take care not to confuse the rebound in the currency with renewed trust from markets. Until outstanding Brexit issues are resolved, and the country acquires a steady path towards a post-Brexit future, long term investors may be more opportunistic in their approach towards the United Kingdom.”


Lewis Shaw, founder of Mansfield-based Shaw Financial Services: “Truss is a pound shop Thatcher with no mandate from the country. We need a General Election now. We’re scraping the barrel so hard we’re through the bottom. Just think of the poor joiners whose job is to get the spur marks out of the wood-panelling in Downing Street. The current administration has no ideas or leadership and has torpedoed our economy. If that’s not a good enough reason to turf them out, I don’t know what is.”

Wes Wilkes, CEO at wealth managers IronMarket“Good riddance to the Chancellor. But if Liz Truss thinks this is enough, she’s wrong. She needs to go, too, and we must not let the Chancellor’s dismissal distract us from the fact that we need a full U-turn on the whole ridiculous mini-Budget that has caused mayhem in our financial system.”

Samuel Mather-Holgate of Swindon-based advisory firm, Mather & Murray Financial: Can you put toothpaste back in the tube? Truss is trying. What a total and utter shambles. Truss billed the pairing of her and the Chancellor as close as you could get, and now Kwarteng has had to fall on her sword. The only way out of this mess is a General Election and a change of government. Markets will go spare today.”


Andrew Montlake, managing director of the UK-wide mortgage broker, Coreco: “This is officially now a Government without a mandate, without a plan and without a clue. The Conservatives know that Truss will never be able to turn people around after this and that whenever an election is called, they will be annihilated. Their only chance is to install a Sunak and Mordaunt double-act to restore some sense of calm maturity to proceedings to see the country through hard times. This may not be enough, though, as the sense of outrage among the British people will linger for a long time.”

Mark Robinson, Managing Director of Southampton-based Albion Forest Mortgages: The current government have been like fish out of water since the mini-Budget. It feels like the Game of Thrones in politics lately, with everyone fighting among themselves and not caring about the people they actually govern. Unfortunately, Winter is coming and they are not prepared. The only way out of this spectacular mess is a General Election, and I don’t think Truss is the one to lead the Conservatives in that election. You know nothing, Liz Truss.”



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