A day of chaos

Kwasi Kwarteng sacked after 38 days as chancellor and replaced by Jeremy Hunt | Liz Truss performs yet another U-turn and drops planned cut in corporation tax | Day of turmoil as Truss tries to appease markets and MPs by sacking Kwarteng

- Rowena Mason Aubrey Allegretti Peter Walker

Liz Truss was desperately clinging to her premiership last night after she sacked her chancellor and ripped up the mini-budget but failed to calm the financial markets or furious Conservative MPs.

In a humiliating reversal, the prime minister backed down on plans to scrap a £18bn rise in corporation tax, and replaced Kwasi Kwarteng as chancellor with Jeremy Hunt.

She insisted that staying in her own position as prime minister would help to "reassure the markets of our financial discipline", but the cost of government borrowing rose and the pound fell following her press conference to announce the changes.

Senior Conservative MPs are now plotting how to remove her from office, with some considering whether to publicly call for her to resign in the coming days. One former cabinet minister said they thought it was "50-50 whether she will make it till Christmas", adding: "If I could wave a magic wand and get rid of her now then I would, but the problem is the mechanism."

Some Tory MPs thought that the appointment of Hunt, a Tory centrist who has twice failed to win the leadership, could buy Truss some time, potentially until the next fiscal event on 31 October. However, others said they regarded Truss as  "finished" and that it was now a matter of time before she was ousted, particularly if there were a succession of further polls showing the Tories more than 30 points behind Labour - a situation that would lead to a landslide win for the opposition.

With Downing Street in disarray, Keir Starmer, the Labour leader, called for a general election, regardless of whether Truss stays or goes, saying the government had "completely run out of road".