British Prime Minister Liz Truss on Friday dismissed Finance Minister Kwasi Kwarteng.

She named former Foreign Minister Jeremy Hunt as his replacement.

"You have asked me to stand aside as your chancellor. I have accepted," Kwarteng wrote in a letter to Truss.

The prime minister replied: "I deeply respect the decision you have taken today. You have put the national interest first ... I know that you will continue to support the mission that we share to deliver a low tax, high wage, high growth economy."

Later on Friday, at a hastily arranged press conference, Truss announced a U-turn on a planned tax cut that was one of her major policy projects. She told reporters that there was a "need to act now to reassure the markets."

"I have therefore decided to keep the increase in corporation tax that was planned by the previous government," Truss said in reference to her predecessor, Boris Johnson, and the former finance minister, Rishi Sunak, who she defeated in the Conservative leadership contest.

Why did Kwasi Kwarteng have to go?

Truss and Kwarteng have been scrambling to reassure markets and lawmakers after a September 23 tax-cutting "mini-budget" that plunged the UK into economic maelstrom. 

Kwarteng had been in Washington for annual talks withthe International Monetary Fund. Before leaving the US capital, Kwarteng insisted he was safe in his role as Chancellor of the Exchequer, as the position of finance minister is known.

However, Truss had reportedly already been seeking a replacement to stave off threats to her own job. It is expected that a U-turn on that budget is to be announced later on Friday.

According to British media reports, Truss was considering reversing further aspects of her government's controversial plans, which sparked market turmoil when they were announced.

In September, Kwarteng announced tax cuts — twinned with heavy borrowing — that spooked markets.

That announcement sent interest that the government would have to pay on borrowing soaring. Meanwhile, thepounds sterling slumped to a record low against the US dollar.

The UK government had alreadyabandoned its intention to cut taxes for the highest earners, prior to Friday's decision to U-turn on corporation tax. 

Who is Jeremy Hunt?

Jeremy Hunt has become the UK's third finance minister in less than two months, replacing Kwarteng, who had been in the role for less than six weeks.

A former foreign minister, Hunt has twice been unsuccessful in running for the ruling Conservative Party's leadership. He lost out to Boris Johnson in the summer of 2019, and was then being knocked out in the first round of voting in a contest which saw Truss get the job earlier this year.

Viewed as someone on the center-right of the party, Hunt endorsed Truss's leadership rival Rishi Sunak in the race to become prime minister.

Hunt advocated remaining in the European Union, ahead of the 2016 Brexit vote which eventually saw the UK leave the bloc.

What might happen next?

TheUK's central bank has moved to reassure investors, including pension funds, that have lent money to the UK government.

The Bank of England began an emergency purchase scheme of government debt bonds at the end of September, hoping to stave off a market collapse. However, those efforts are set to end on Friday.

The financial and political chaos has fueled speculation about whether Truss can survive in office after less than 40 days as prime minister.

Truss — the fourth prime minister in six years in Britain — was elected by members of the Conservative Party rather than the broader UK electorate.

jsi, rc/fb (dpa, AFP, Reuters, AP)