Kwasi Kwarteng cut short his visit to the International Monetary Fund by flying home early from Washington in response to a growing political crisis over his tax-cutting budget.
Adding to signs that the government is preparing to announce the scrapping of its plan to reverse the corporate tax hike, the chancellor left the US capital a day earlier than planned.
Treasury sources said the chancellor had spent two constructive days in Washington but was keen to return to London to discuss his medium-term financial plan, due to be announced on 31 October, with colleagues.
But his unscheduled departure on an overnight flight from Washington capped a dramatic day for the Truss government and drew comparisons with the sterling crisis experienced by the Labor government in 1976.
Chancellor Denis Healey then turned around at Heathrow rather than fly to an IMF meeting in Manila after pressure on the pound intensified.
Treasury sources declined to comment on whether Quarteng’s decision meant a change in corporation tax was imminent, but the chancellor was under pressure to make a decision before financial markets open for business on Monday.
Sterling and government bonds – or gilts – rose yesterday amid rumors of a change of heart on taxes. But the Bank of England’s bond support scheme ends on Friday.
“It’s all about the medium-term fiscal plan,” a Treasury source said. “The chancellor wanted to make sure he had the widest possible range of colleagues involved.”
Kwarteng has previously been forced to deny that his chancellorship is in danger, insisting he is “absolutely, 100%” confident he will stay in the job next month despite the growing Tory rebellion.
But there were signs yesterday that tax decisions were being made by Liz Truss in London, not the Chancellor 3,000 miles across the Atlantic.
On another feverish day in Westminster, government sources told the Guardian that No 10 officials, not their Treasury counterparts, are reviewing the mini-budget as part of the Prime Minister’s efforts to balance the books.
The Trust has repeatedly promised to reverse plans by former chancellor Rishi Sunak to raise corporate tax from 19% to 25%. Sources suggested that the potential drop could include an increase of just one to two percentage points, rather than a full 6%.