In a letter to the Prime Minister, Kwarteng wrote:

“You have asked me to stand aside as your Chancellor. I have accepted.

“When you asked me to serve as your Chancellor, I did so in full knowledge that the situation we faced was incredibly difficult, with rising global interest rates and energy prices. However, your vision of optimism, growth and change was right.”

He added: “As I have said many times in the past 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 – that must still change if this country is to succeed.”

Rumour mill into overdrive

Rumours of the Chancellor’s dismissal began swirling in the media this morning as he flew back early from his trip to the International Monetary Fund (IMF) in Washington where he was meeting other global finance leaders.

Kwarteng was pictured entering No 10 Downing St at around midday, with reports that he had returned from the US for urgent discussions with the Prime Minister about further U-turns to the government’s fiscal plan, including a reversal of the freeze on corporation tax.

However, within minutes of the meeting beginning, the Westminster gossip mill went into overdrive with both the Times and Reuters announcing that the Chancellor was ‘due to be sacked’.

Mini Budget blues

The Chancellor has lost his job on the back of the reaction to his mini Budget, held on 23 September.

Following a series on unfunded tax cutting announcements, the pound crashed to a low not seen since 1971; the Bank of England was forced to intervene in the bond market to stop a ‘run’ on pensions; and the number of residential mortgage products fell by a record 935 in the course of a day.

A U-turn last week on the decision to scrap the additional rate of income tax for the highest earners and an announcement that the full Budget would be brought forward to 31 October were not enough to keep the Chancellor in his post.

Who next and what next?

As Kwarteng becomes the second shortest-serving UK Chancellor in history (following Iain Macleod, who died of a heart attack just 30 days into the role in 1970), he is succeeded by former Health Secretary Jeremy Hunt, who will become the fourth Chancellor this year.

Meanwhile, political opponents have weighed in with their thoughts on today’s extraordinary events.

Shadow Chancellor Rachel Reeves said on Twitter: “Changing the Chancellor doesn’t undo the damage that’s been done. We don’t just need a change in Chancellor, we need a change in government.

“Only Labour offers the leadership and ideas Britain needs to secure the economy and get out of this mess.”

Meanwhile, Liberal Democrat leader Ed Davey has called for a General Election.

He said: “Boris Johnson failed our country and now Liz Truss has broken our economy. It’s time the British people were given their say on this shower of a Conservative party. We need a General Election now.”

In terms of the market, the pound fell to 1.152 (down 0.9 per cent) against the dollar and to 1.119 (down 0.4 per cent) against the Euro, following the announcement of the Chancellor’s dismissal.