UK PM Truss Stands By Chancellor Kwarteng Amid Currency Crisis

Sterling slumped against the dollar since last Friday, when Chancellor of the Exchequer Kwasi Kwarteng announced the costs of subsidizing household and business fuel bills. The euro, Canadian and Australian dollars and Japanese yen have all seen similar declines.

British Prime Minister Liz Truss has stood by the chancellor of the exchequer after calls for her to sack him.

A Downing Street spokesman told the Guardian’s political editor Pippa Crerar that Truss was resisting pressure from opposition MPs and some Conservative backbenchers to sack Kwasi Kwarteng after the pound tumbled against the US dollar.

That followed Kwarteng unveiling his tax-cutting mini-budget on Friday, which contained measures to subsidize soaring energy prices caused by Western sanctions on Russia at the cost of increased public borrowing.

"The PM and the chancellor are working on the supply side reforms needed to grow the economy which will be announced in the coming weeks," Crerar quoted the spokesman as claiming in a tweet.

The White House weighed in on the row on Wednesday, urging the Truss government to show "fiscal prudence".

Meanwhile, the Bank of England moved swiftly to buy-up government debt bonds after a run on the financial instruments threatened to bankrupt many pension funds.

Opposition leader Sir Keir Starmer, currently enjoying the parliamentary autumn recess at his Labour Party Conference in Liverpool, demanded that parliament be recalled on Wednesday to debate the crisis.

Starmer alleged that Truss had "lost control" and was a "danger" to the economy.

The euro, Canadian and Australian dollars and Japanese yen have all seen similar declines against the dollar since last Friday.

Already volatile stock markets on both sides of the Atlantic were thrown into further turmoil this week following the presumed sabotage of the Nord Stream 1 and 2 natural gas pipelines from Russia.