Kwasi Kwarteng has been sacked as chancellor 38 days after he was appointed to the position.

The news comes amid speculation prime minister Liz Truss will announce a screeching U-turn on the chancellor's mini-budget announced at the end of last month.

The former chancellor arrived at Downing Street to meet the prime minister just after noon, entering through the back door, having returned early from the US for crisis talks with the prime minister.

Kwasi Kwarteng said he has accepted prime minister Liz Truss’ request he “stand aside”.

He becomes the second shortest serving chancellor the UK has had on record.

Ms Truss will stage a press conference in Downing Street later on Friday in which she is expected to announce major changes to Mr Kwarteng’s £43 billion tax giveaway.

Mr Kwarteng’s departure may give Ms Truss some brief breathing space as she seeks to shore up her battered authority after weeks of turmoil following his “fiscal event” last month.

But it will also raise fresh questions about her chances of survival – because she was closely linked to the policies that caused the problems.

The commitments to reverse a hike in national insurance rates and ditch a planned rise in corporation tax, without explaining how they would be paid for, were the key planks of her leadership election campaign.

But after the financial markets took fright – with the pound plummeting against the dollar and the cost of government borrowing soaring – the Conservatives have seen their opinion poll ratings tank.

Liz Truss has told Kwasi Kwarteng that she is “sorry” to lose him as Chancellor, adding that: “You have put the national interest first.”

Rachel Reeves said Kwasi Kwarteng’s sacking as chancellor “doesn’t undo the damage” already inflicted.

Labour’s shadow chancellor said: “Changing the chancellor doesn’t undo the damage that’s already been done.

“It was a crisis made in Downing Street: Liz Truss and the Conservatives crashed the economy causing mortgages to skyrocket and has undermined Britain’s standing on the world stage.

“We don’t just need a change in chancellor, we need a change in Government. Only Labour offers the leadership and ideas Britain needs to secure the economy and get out of this mess.”

Downing Street has confirmed that former foreign secretary and Conservative leadership contender Jeremy Hunt has been named Chancellor.

Kwasi Kwarteng's letter to Liz Truss

In his letter to Liz Truss, Kwasi Kwarteng wrote: “Dear Prime Minster.

“You have asked me to stand aside as your Chancellor. I have accepted.

“When you asked me to serve as your Chancellor, I did so in full knowledge that the situation we faced was incredibly difficult, with rising global interest rates and energy prices. However, your vision of optimism, growth and change was right.

“As I have said many times in the past weeks, following the status quo was simply not an option. For too long this country has been dogged by low growth rates and high taxation — that must still change if this country is to succeed.

“The economic environment has changed rapidly since we set out the Growth Plan on 23 September. In response, together with the Bank of England and excellent officials at the Treasury we have responded to those events, and I commend my officials for their dedication.

“It is important now as we move forward to emphasise your government’s commitment to fiscal discipline. The Medium-Term Fiscal Plan is crucial to this end, and I look forward to supporting you and my successor to achieve that from the backbenches.

“We have been colleagues and friends for many years. In that time, I have seen your dedication and determination. I believe your 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.”