Kwasi Kwarteng has been sacked as chancellor three weeks after his mini-budget unleashed chaos in the economy.
He was appointed to the role by Liz Truss only 38 days ago, making him the second-shortest serving chancellor after Iain Macleod, who died a month after being handed the job by Edward Heath.
Mr Kwarteng’s downfall was set in motion by the mini-budget on 23 September, in which he announced £45bn in unfunded tax cuts.
The mini-budget pushed the pound to a record low against the dollar, sent the cost of government borrowing and mortgage rates up and led to an unprecedented intervention by the Bank of England.
Chris Philp, who was heavily involved in plans for the mini-budget, has also lost his job as chief secretary to the Treasury and has been moved to the Cabinet Office.
In Mr Kwarteng’s letter to Ms Truss, he said: “You have asked me to stand aside as your chancellor. I have accepted.”
He said he accepted the job “in full knowledge that the situation we faced was incredibly difficult, with rising global interest rates and energy prices”.
But he said the PM’s “vision of optimism, growth and change was right” and “following the status quo was simply not an option”.
He finished his letter by saying they have been “colleagues and friends for many years” and he believes her “vision is the right one”.
“It has been an honour to serve as your first chancellor. Your success is this country’s success and I wish you well,” he wrote.
Moments later, he was seen leaving No 11 Downing Street and was driven away from the home he had only occupied for just over a month.
Ms Truss and Mr Kwarteng, who have been close friends for years, insisted that the turbulence in the UK economy was part of a global problem exacerbated by the war in Ukraine and post-pandemic recovery.
But last week, after open revolt by Tory MPs and a record surge for Labour in the polls, the prime minister announced the first major reversal of mini-budget policies when she backtracked on scrapping the 45p top rate of income tax.
The second U-turn is expected to come on Friday afternoon, with the government set to raise corporation tax from 19% to 25% next April, despite promising not to do so in the mini-budget.
Less than an hour earlier, Mr Kwarteng had landed back in London after cutting short meetings with the International Monetary Fund in Washington DC.
He had been due to make a medium-term fiscal statement on 31 October.
The Conservative Party has now had four chancellors in the past three years – Mr Kwarteng, Nadhim Zahawi, Rishi Sunak and Sajid Javid.
And the next chancellor, who will be chosen by Ms Truss, will be the seventh Tory chancellor in 12 years.
While the PM’s focus will be on choosing a new chancellor, there is set to be a renewed focus on whether Ms Truss can remain in the job.
A Tory MP told Sky News: “The idea that the prime minister can just scapegoat her chancellor and move on is deluded.
“This is her vision. She signed off on every detail and she defended it.”