Liz Truss U-turns on corporation tax in brief address after sacking Kwasi Kwarteng

Liz Truss has U-turned on her plans to scrap the rise in corporation tax, a major part of her controversial mini-Budget, after a chaotic morning in which she sacked Chancellor Kwasi Kwarteng.

Truss had been under pressure to make changes to the financial plans ahead of the medium term fiscal plan due to be announced at the end of this month, following criticism from her own MPs and turmoil in the markets.

Since the mini-Budget was announced only two weeks ago, the cost of government borrowing has soared and the value of the pound has fallen. 

"We need to act now to reassure the markets of our fiscal discipline," Truss told the Downing Street press conference on Friday afternoon. 

She confirmed she had "decided to keep the increase in corporation tax that was planned by the previous government, this will raise £18bn per year". 

Truss doubled down on her ambitions for growth, saying the aim is to "deliver a low tax, high wage" economy, adding that "global economic conditions are worsening due to the continuation of Putin's appalling war in Ukraine". 

This afternoon's Downing Street briefing came after a dramatic morning in which Truss sacked her former chancellor, Kwarteng.

Former foreign secretary Jeremy Hunt has replaced Kwarteng as chancellor, and Chris Philp, former Chief Secretary to the Treasury, has been moved to the Cabinet Office and replaced by Edward Argar. 

In his resignation letter, Kwarteng said that the economic situation had "changed rapidly" since he announced his mini-Budget in September, including a significant intervention by the Bank of England after the pound tanked and the price of government debt soared. 

"In response, together with the Bank of England and excellent officials at the Treasury we have responded to those events, and I commend my officials for their dedication," he added.

Truss responded by saying that she was “deeply sorry” to lose her long-term political ally Kwarteng from government. 

"We share the same vision for our country and the same firm conviction to go for growth," she wrote in response to him.

"You have been chancellor in extraordinarily challenging times in the face of severe global headwinds."

First Minister Nicola Sturgeon has called on the prime minister to go too, writing on Twitter that "the best thing Liz Truss could do for economic stability now is resign".

"Her decisions have crashed the economy and heaped misery on people already struggling with a cost of living crisis," she wrote.

"The only decent thing for Tory MPs to do now is call time on her government and allow an election."