Former Health Secretary Jeremy Hunt has been named Chancellor after Liz Truss sacked her long-time ally Kwasi Kwarteng in a bid to hold on to power.

Chris Philp has agreed to leave his post as Chief Secretary to the Treasury and will take a new role at the Cabinet Office. 

The Prime Minister has called a press conference for today and is tipped to bow to political and economic pressure and retain the plan to raise corporation tax from 19% to 25%.

This would slice £18 billion off the proposed package of £43bn and follows the u-turn on cutting the top rate of tax.

Mr Kwarteng confirmed his departure in a letter to the Prime Minister in which he spoke of the importance of fiscal discipline. He wrote: “I look forward to supporting you and my successor to achieve that from the backbenches.”

The expected tax announcement comes as Conservative MPs have given Ms Truss 17 days to save her job, with claims that leadership rivals Rishi Sunak and Penny Mordaunt are being lined up to replace her. 

Under the rules of the 1922 Committee, the Prime Minister cannot face a confidence vote until she has been in office for a year. However, in practice, if enough MPs pressure Sir Graham Brady, the committee chairman, one would probably take place.

Mr Kwarteng cut short his trip to Washington yesterday to head home for talks with Prime Minister Liz Truss.

The Bank is due to end its emergency bond-buying scheme at the close of market business today, with speculation it may be forced to resume the programme if markets remain volatile.

In response to the anticipated u-turn, yields on the 30-year UK gilt – which has suffered the toughest sell off amid the market turmoil since the mini budget – dropped 17 basis points to 4.3%, thereby sharply reducing government borrowing. The FTSE 100 was up about 0.7% in mid-morning trade. Traders cut their forecasts for interest rates to peak to 5.5%, from over 6% yesterday.

Mr Kwarteng ditched a meeting planned for today with the International Monetary Fund which has been heavily critical of his tax cuts.

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The managing director of the IMF Kristalina Georgieva, told a press conference: “Our message to everybody, not just the UK, is that at this time, fiscal policy should not undermine monetary policy.

The latest moves follow the Prime Minister’s badly-received meeting with the 1922 Committee of Conservative backbenchers this week which failed to provide many MPs with the reassurances they were seeking.

Business Secretary Jacob Rees-Mogg has blamed the Bank of England for the turmoil in the value of sterling and the rising cost of Government borrowing, while former Tory leader Sir Iain Duncan Smith said Governor Andrew Bailey’s handling of the situation had been “stupid”.

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