Image source, Getty Images

Jim O'Neill, formerly a Treasury minister under the Conservatives and a chief economist at Goldman Sachs, now a crossbench peer, has voiced criticism of the government's actions.

Lord O'Neill told BBC Radio 4 earlier that by maintaining the "pretence" that they are going to keep going with their mini-budget plans, the government is "sowing deep-seated suspicion" among the private sector about its sincerity.

"The longer it goes on, the worse it is," he says.

"As tough as it is politically, the quicker they did reverse, the better. But to carry on down this path, I mean, it's not far off insanity," he adds.

The pound has risen above $1.13 against the dollar, jumping from under $1.11 earlier in the day, hitting and maintaining a one-week high.

It had fallen earlier as higher-than-expected inflation data drove up the dollar.

Meanwhile, the FTSE 100 stock index in London closed higher.

Markets are continue to bet on a U-turn from the UK government on its mini-budget, IG analyst Chris Beauchamp said.

"It looks like the market is pricing in a rising probability that a major U-turn - and even potentially several U-turns - are likely," he said.

Image source, Getty Images

Chancellor Kwasi Kwarteng has been asked again about speculation that the government is considering a U-turn on its plan to scrap the planned increase on corporation tax.

In an interview with the Telegraph, external, he said: “On corporation tax. We wanted to keep that very, very competitive. And that’s something that we think is a great idea."

But he did not rule out increasing the current 19% rate. The tax had been due to increase from 19% to 25% in April 2023, but Kwarteng said in his 23 September mini-budget that he would cancel the rise.

Also, according to the newspaper, in response to a question about how markets “have improved today because they think you're about to do a U-turn on corporation tax”, Mr Kwarteng said: “Let’s see.”

In the interview, Kwarteng also said there would be “no real cuts to public spending” but added: “Let’s face it, there are difficult choices within that you have to prioritise."

Earlier, when asked repeatedly about speculation about a U-turn, the chancellor said he was "totally focused" on delivering the tax-cutting plans of his mini-budget, which are aimed at increasing UK economic growth.

Polling expert Prof Sir John Curtice has told the BBC that Prime Minister Liz Truss is as unpopular as former Tory prime minister John Major was when the UK crashed out of the European Exchange Rate Mechanism in 1992.

"She [Liz Truss] is more unpopular than Boris Johnson was at the worst period of his premiership, which was in the middle of January this year when the Partygate scandal was at its height," he says.

He says Truss has two problems: "One is she isn't really liked, her personality is not one that warms to the general public. And, secondly, now she is regarded as incompetent."

As we reported earlier, a YouGov poll for the Times suggests that Labour is ahead of the Tories by 28 points - with the Conservatives on 23% and Labour on 51%.

An economist who was cited by Liz Truss in her original plans to stimulate growth says the prime minister should not U-turn on her mini-budget.

Patrick Minford, a professor of economics at Cardiff Business School, says the PM's plan is "perfectly good" and the Bank of England should instead be "much more active" in intervening in the UK government bonds market.

"It's really important we don't do something stupid at this point - Liz Truss's policies for growth are absolutely right and to be thrown off them by a bit of market turbulence is insane," he tells BBC Radio 4.

He acknowledges there is a "great deal of nervousness" about the financial markets, which he says are facing "enormous turbulence because of the worldwide tightening of money".

Chris Mason
Political editor

Image source, UK Parliament

Liz Truss's future as prime minister is being actively discussed at every level of the Conservative Party.

And so is every other conceivable scenario, as the government confronts an almighty mess, at least partially of its own making.

The mood among Tory MPs is funereal, angry, fatalistic. "It's checkmate, we're screwed" one told me.

"It's dire," "we're done for," and "there is no question in my mind, they'll have junk loads of this stuff and U-turn" are three more quotes in my notebook.

Conservative MPs agree on one thing: this is a total shambles. But they don't agree on what should happen next.

Some say bin all the tax cuts. But they are the essence of what Liz Truss stands for.

Others say amend the help being offered with energy bills, make it more targeted, and save money. But that's complicated.

There are those who think the chancellor should resign or be sacked.

And others argue Liz Truss has tanked and bombed with such unimaginable speed she has to go. But they're not sure who could replace her, or how.

And so, for now, a paralysis: a prime minister robbed of her power and authority, desperately trying to grapple it back and work out what, if anything, of her agenda - her premiership - is salvageable.

Her chancellor was defiant when asked whether he and his boss would still be around in a month: “Absolutely, 100%. I am not going anywhere.”

It might not be up to him. Or her.

Image source, PA Media

Let's look at the latest developments as the government comes under continued pressure to rethink the tax cuts from the mini-budget:

• Chancellor Kwasi Kwarteng has acknowledged there was "some turbulence" following his mini-budget, but said he was "totally focused" on delivering the tax-cutting plans
• He and Prime Minister Liz Truss will "100%" be in office in a month's time, he said, reiterating that he will present his medium-term fiscal plan on 31 October
• Amid speculation about a possible U-turn on the government's plan to cut corporation tax caused, the pound jumped from under $1.11 to $1.13 before falling back this afternoon
• A Downing Street spokesperson refused to comment on reports that talks are under way on reversing parts of the mini-budget, saying repeatedly "our position hasn't changed"
• Former Tory MP and chief executive of the Tory grassroots website Conservative Home, Paul Goodman, suggested the Tory Party may need to find new leadership
• Foreign Secretary James Cleverly and International Trade Secretary Kemi Badenoch have urged their party to support Liz Truss, saying a change of leader would be disastrous
• The managing director of the International Monetary Fund has urged the UK and other nations to be "coherent and consistent" with their budgets, saying "don't prolong the pain"

Image source, Reuters

A Downing Street spokesperson has refused to comment on reports that talks are under way at No 10 on reversing parts of the mini-budget, saying repeatedly "our position hasn't changed".

They doubled down on comments from Kwasi Kwarteng where he said his focus is on growth, adding that he and the prime minister are working together ahead of a fiscal statement at the end of the month.

Asked if Liz Truss stands by her remarks that it would be wrong to raise taxes on businesses in the face of a recession, the spokesperson said: "You heard from the prime minister yesterday about her plan for growth and her and the chancellor's approach.

"They are both focused on delivering on the growth plan, making sure that we get growth back into our economy...and ensuring that more people keep more of the money that they earn."

Image source, PA Media

Former Conservative chancellor Norman Lamont says the choices facing PM Liz Truss and Chancellor Kwasi Kwarteng are "appalling" and that he would support a reversal of the mini-budget.

Earlier, he told BBC Radio 4's World at One programme: "You know, sometimes it's said that politics is the art of the possible. I think it's the art of choosing between the incredible and the utterly impossible."

He said the government has three choices, He could reverse the changes in the mini-budget, opt for cuts to public spending - which the PM has ruled out - or try to "fudge the arrangement with the OBR".

On the third option, he said: "I would advise against it. I think it would not impress the markets but it will be a great temptation to the government to delay the decisions."

Lord Lamont added: "If they do reverse the budget, I would support them, but I personally think that's rather unlikely."

Image source, PA Media

International Trade Secretary Kemi Badenoch is urging her fellow Conservative MPs to support Liz Truss, saying a change of leader would be disastrous.

The former Conservative leadership candidate says she understands backbenchers have a wide variety of views but called on them to "look to the chancellor ... what he is saying is there will be a medium term fiscal statement on the 31 October".

She adds: "The prime minister said a couple of weeks ago that we had not laid the ground enough for it.

"She is someone who listens, and she has made a change already to the mini-budget. We are going for growth... there is a purpose to this we should remember that."

Badenoch says she agrees with Foreign Secretary James Cleverly that "to even talk about changing the leader at this time would be disastrous".

"Everybody I’ve spoken to in Whitehall in the past hour is certain a U-turn is on the cards – if not yet nailed on," says Sebastian Payne, Whitehall editor of the Financial Times.

Speaking to the BBC, he says: "The problem Liz Truss and Kwasi Kwarteng now have is that [U-turn] is being built into the markets’ expectations.

"If they don’t U-turn on certain elements of the mini-budget, they’ll end up in a worse situation than they were in at the beginning of today.

"That just shows how mishandled this whole thing has been."

Payne says the "rumours and chat emanating from Downing Street" conflict with what Kwarteng said a short while ago that "nothing has changed".

"He is still talking about 31 October as that date when he will set out the fiscal framework that will somehow make all these sums suddenly add up.

"That feels wholly unlikely – there’s so much pressure being sustained on the chancellor and on the prime minster now this cannot hold for another 18 days."

Earlier today the pound jumped from under $1.11 to $1.13 on rumours that the government planned to U-turn on its controversial mini-budget.

It then fell back this afternoon after stronger-than-expected inflation data from the US drove up the value of the dollar.

Sterling is currently trading at around $1.12 against the US currency after Chancellor Kwasi Kwarteng said he was focused on delivering his economic plan, when asked about rumours of a possible U-turn.

He told reporters his position “hasn’t changed” and he would present his plan for balancing the UK’s finances on 31 October.

“I’m totally focused on delivering on the mini budget, making sure that we get growth back into our economy,” Kwarteng said.

Government borrowing costs also fell back today, following the Bank of England's move earlier this week to step up its emergency bond buying programme, which was brought in after the mini-budget caused alarm among investors.

Faisal Islam
Economics editor, reporting from Washington

There were rumours that U-turns were being considered - and whatever the truth of those rumours, they made it into the market.

The cost of borrowing for UK government bonds fell by an incredible amount over the course of this morning - over half a percentage point since midnight. The pound went up too.

So I didn't really know what to expect when I spoke to the chancellor in Washington on behalf of all UK broadcasters.

But he was pretty clear: when I asked him whether there was going to be a U-turn, he said the government's position hasn't changed.

No U-turns - that's the message from here.

Whether that survives a return to London from Washington, we'll have to see.

Chancellor Kwasi Kwarteng has told reporters that he and the prime minister will "100%" be in office in a month's time.

Kwarteng acknowledged there was "some turbulence" following his mini-budget, but said he was "totally focused" on delivering the tax-cutting plans.

He insisted "our position has not changed", adding that he will present his medium-term fiscal plan on 31 October.

He was asked if he'd have to consider his position if a major part of his plan was dropped... you can watch what he said below.

At about the same time as Kwasi Kwarteng was speaking to reporters, former Conservative chancellor George Osborne tweeted to suggest a U-turn on he government's mini-budget is "inevitable".

Chancellor Kwasi Kwarteng has just spoken to reporters amid speculation about a possible U-turn on his mini-budget.

He said he was totally focused on delivering it.

Here's a reminder of what was in the 23 September plan, which Kwarteng said included the biggest tax cuts in a generation and which was met with chaos on the financial markets.

Image source, .

You can read more detail on the mini-budget here.

Asked whether Liz Truss will be prime minister next week and whether he will remain chancellor, Kwasi Kwarteng says: "Absolutely 100%, I'm not going anywhere."

He acknowledges that there was "some turbulence" after the mini-budget but says it's a "very dicey situation globally".

Kwarteng is asked whether he would consider his position as chancellor if he had to U-turn on a major part of his mini-budget.

He avoids answering directly and repeats that he is "totally focused on the growth agenda".

"I'm totally focused on making sure people are helped with their energy bills, that the energy price guarantee is understood, that the scale of our intervention is understood," he says.

Asked about reports of a meeting taking place at Downing Street to consider a possible U-turn on the mini-budget, Chancellor Kwarteng says he speaks to the prime minister "all the time" and "we are totally focused on delivering the growth plan".

"We were facing a tax high of 70 years and no growth," he says.

"IMF officials just yesterday said growth is a central focus of international community."

Image source, BBC/Pool

Chancellor Kwasi Kwarteng has been speaking to reporters in Washington where he's attending the International Monetary Fund's annual meeting.

Asked about the markets responding amid rumours about a possible U-turn on the government's plan to cut corporation tax, he says he is "totally focused" on delivering his mini-budget.

He says his priority is making sure "we get growth back into the economy".

He's asked several times if the government will row back on any measures announced in the mini-budget but does not answer the question directly.

The managing director of the International Monetary Fund (IMF) has urged the UK and other nations to be "coherent and consistent" with their budgets.

Kristalina Georgieva was speaking at a press conference during the IMF's annual meeting in Washington.

"I do believe it is correct to be led by evidence, so if the evidence is that there has to be a recalibration, it is right for governments to do so," she said.

She added: "And the Bank of England action was appropriate. There was a financial risk to financial stability, the Bank of England addressed it, notwithstanding the commitment it has to pursuing its main monetary policy objective which is price stability."

It follows speculation that Liz Truss's government is considering adjusting controversial plans in the mini-budget of 23 September.

"Our message to everybody, not just the UK, is that at this time, fiscal policy should not undermine monetary policy," Georgieva said.

"Don't prolong the pain and make sure that actions are coherent and consistent," she added.

Georgieva described her meeting this week with UK chancellor Kwasi Kwarteng and Bank of England Governor Andrew Bailey as "very constructive".