Chancellor Kwasi Kwarteng returns early from US trip for talks with Liz Truss as mini-budget U-turn expected

The Chancellor is cutting his trip to the US short and is returning to London ahead of schedule for urgent talks with Liz Truss.

Expectations are growing that they will scrap parts of their mini-budget to reassure markets.

Kwasi Kwarteng has been in the States ahead of the International Monetary Fund’s (IMF) annual meeting in Washington DC this weekend.

He is now due to land back in the UK on Friday morning where he is likely to find a significant section of his mini-budget redrawn after days of open revolt among Tory MPs and an emerging market consensus that another U-turn is on the cards.

He cancelled appointments at the IMF gathering to fly home early.

A Treasury spokesperson said: “After completing a successful series of meetings at the IMF, the Chancellor is returning to London today to continue work at pace on the medium-term fiscal plan”.

The Prime Minister’s key pledge to scrap the planned increase in corporation tax from 19% to 25% is widely seen as a likely casualty in the coming days, as Truss seeks to save her embattled premiership.

It comes amid reports that senior Tories are plotting the possibility of replacing Truss with a joint ticket of Rishi Sunak and Penny Mordaunt.

Downing Street on Thursday did not deny that the potential exists for a reversal on the corporation tax policy, with talks said to be under way between No 10 and the Treasury on abandoning elements of the £43bn tax-cutting plan.

The Bank of England is set to end their emergency bond-buying scheme on Friday, two weeks after Kwarteng’s mini-budget caused financial chaos in the markets amid concerns over higher borrowing costs, triggering concerns in particular about the fate of pension funds.

A growing expectation on Thursday of a Government U-turn on corporation tax appeared to reassure the finance industry, after Bank of England Governor Andrew Bailey spooked the markets by insisting that the emergency support would not be extended.

Mr Kwarteng also insisted to the Telegraph that there would be “no real cuts to public spending”, appearing to double down on comments made in the Commons by Truss on Wednesday.

The Government’s plans revolve around securing an increase in economic growth – with a target of an annual rise of around 2.5% in gross domestic product (GDP).