LONDON — British Prime Minister Liz Truss on Friday scrapped another key tax-cutting policy after firing her finance minister, in a bid to placate markets after the government’s controversial “mini-budget.”

“It is clear that parts of our mini-budget went further and faster than markets were expecting,” Truss said in a brief press conference.

Truss scrapped the pledge to reverse predecessor Boris Johnson’s hike of corporation tax from 19% to 25%, a decision estimated to restore around £18 billion ($20.1 billion) to the U.K. Treasury’s coffers by 2026.

Finance Minister Kwasi Kwarteng was fired earlier on Friday after less than six weeks in the job, amid mounting political pressure and market chaos.

Jeremy Hunt — a former Health Secretary and Foreign Secretary — was announced as Kwarteng’s successor. Chris Philp, chief secretary to the Treasury, was also replaced by Edward Argar.

Market reaction

U.K. government bonds — known as gilts — rallied sharply ahead of Truss’ news conference. The long-dated 30-year yield briefly touched 4.261% during morning trade. Yields move inversely to prices.

However, bond prices gave back gains after the conference, with the 30-year yield returning to around 4.58% by around 3 p.m. U.K. time.

Sterling whipsawed during a volatile session and fell around 1.4% against the dollar after Truss’ speech, trading at around $1.1165.

In her press conference, Truss said she wanted to reassure markets of the government’s fiscal discipline, and that Hunt shared her “convictions and ambitions” for the country.

The government earlier this month abolished its plan to scrap the top rate of income tax after a substantial public backlash, but which failed to quell market turbulence.

Kwarteng letter

Kwarteng cut short a visit to Washington on Thursday to fly back to London as government ministers scrambled to address the market chaos unleashed in recent weeks.

This included a sell-off of long-dated government bonds that led the Bank of England to intervene in order to save pension funds from collapse, and a spike in mortgage rates for prospective homeowners.

Truss had been under immense pressure to rethink her economic policies, with opinion polls showing support for the ruling Conservative Party collapsing and lawmakers from within her own party reportedly plotting to oust her after a tumultuous first five weeks in office.

Despite this, both she and Kwarteng had remained publicly resolute in recent days, accusing critics of the government’s

radical fiscal plans of being part of an “anti-growth coalition.”

“The economic environment has changed rapidly since we set out the Growth Plan on 23 September. In response, together with the Bank of England and excellent officials at the Treasury we have responded to those events, and I comment my officials for their dedication,” Kwarteng said in his resignation letter after being asked to step down.

“It is important now as we move forward to emphasise your government’s commitment to fiscal discipline. The Medium-Term Fiscal Plan is crucial to this end, and I look forward to supporting you and my successor to achieve that from the backbenches.”

“As I have said many times in the past few weeks, following the status quo was simply not an option. For too long this country has been dogged by low growth rates and high taxation — and that must still change if this country is to succeed,” Kwarteng added in his letter.

“We have been colleagues and friends for many years. In that time, I have seen your dedication and determination. I believe your vision is the right one. It has been an honour to serve as your first Chancellor.”