Sajid Javid quit as the U.K.’s Chancellor of the Exchequer as Boris Johnson’s first major Cabinet reshuffle went disastrously wrong.
The finance minister resigned after a face-to-face row with Johnson inside 10 Downing Street. The prime minister demanded that Javid fire all five of his most senior aides but the chancellor refused and quit, according to three people familiar with the matter.
Javid had served as Britain’s finance minister since July 2019. His departure throws Britain’s preparations for life outside the European Union into chaos, just four weeks before he was due to deliver a budget on March 11. Johnson’s office named Javid’s deputy Rishi Sunak as the new chancellor.
Javid stood for leadership of the Conservative Party against Johnson last year, coming fourth in the race, before being appointed chancellor.
He has been locked in a power battle with Johnson’s top adviser Dominic Cummings for months. Last year, a furious Javid confronted Johnson and Cummings, over the dismissal of Sonia Khan, his media adviser. Cummings had fired her on Aug. 29 after accusing her of lying about being in contact with former colleagues close to Javid’s predecessor, Philip Hammond, who is committed to preventing a no-deal Brexit.
One of five sons of Pakistani immigrants, Javid worked in business and finance before joining Parliament in 2010, with roles at Chase Manhattan Bank and Deutsche Bank. A major figure in the Tory party, he has held various Cabinet posts, including the culture, business and housing portfolios.
His departure is the most dramatic of any chancellor since Nigel Lawson resigned in 1989. Lawson quit because Margaret Thatcher refused to fire her personal adviser Alan Walters, whom he accused of undermining his position.
Javid’s replacement, currently chief secretary to the Treasury, is seen as a rising star in the Conservative Party. He worked at Goldman Sachs and in hedge funds before his career in politics.
Elected to Parliament in 2015, Sunak backed Brexit and was promoted to his Treasury role by Johnson last year. He studied at Oxford and has an MBA from Stanford. He represented the Tories in TV debates during the 2019 general election.
Sunak must now rapidly prepare for a budget that was already set to provide a major fiscal boost after a decade of austerity, and there is speculation that the new chancellor may prove less of a brake on Johnson’s spending ambitions. The pound rallied and gilts fell on the news of Javid’s resignation.
Fiscal rules introduced by Javid allow for an extra 20 billion pounds ($26 billion) of infrastructure spending but require day-to-day spending and revenue to be in balance within three years.
The balanced-budget goal is much tighter than had been expected, possibly reflecting the restraining influence of Javid, who last month asked ministers to find savings ahead of a spending review due to take place later this year.
During his Tory leadership campaign, Johnson had promised tax cuts totaling more than 20 billion pounds ($26 billion), including raising the point at which people pay higher-rate income tax. But most of these pledges were ditched ahead of the general election, with giveaways limited to a payroll saving of less than 100 pounds a year for most workers.
–With assistance from Andrew Atkinson.
More must-read stories from Fortune:
—Stock scammers are using coronavirus to dupe investors, SEC warns
—Asia worries about big events like the Olympics amid coronavirus spread
—Why China is still so susceptible to disease outbreaks
—Looking to cut emissions, Europe eyes a “sustainability” tax on meat
—Fortune Explains: Tariffs and trade wars
Subscribe to Fortune’s Bull Sheet for no-nonsense finance news and analysis daily.