The government is set to raise corporation tax despite promising not to do so in the mini-budget, Sky News understands.

Chancellor Kwasi Kwarteng promised during last month’s mini-budget to keep corporation tax at 19% instead of increasing it to 25%, as was planned.

The change in direction is the second major tax cut U-turn in three weeks after the government confirmed it would not go ahead with a plan to scrap the 45p top rate of income tax promised in the mini-budget on 23 September.

Mr Kwarteng cut short his trip to the International Monetary Fund in Washington DC and returned to the UK on Friday morning as expectations of another significant U-turn mounted.

His position is also in the balance, with Downing Street confirming Liz Truss will hold a press conference this afternoon but Mr Kwarteng will not be present.

After days of unrest in Westminster among Tory MPs, one former cabinet minister told Sky News Mr Kwarteng being sacked is now “inevitable”.

But just hours earlier, international trade minister Greg Hands told Sky News the PM has “total confidence” in Mr Kwarteng.

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Labour’s shadow chancellor, Rachel Reeves, said: “A humiliating U-turn is necessary – but the real damage has already been done to millions of ordinary people now paying much higher mortgages and struggling to make ends meet.”

The past three weeks have been marked by economic turmoil, with the pound reaching a record low against the dollar, interest rates soaring and the Bank of England having to intervene.

The reversal follows warnings from the Institute for Fiscal Studies, a leading economics think tank, that Mr Kwarteng’s £45bn package of unfunded tax cuts had left a £62bn black hole in the public finances.

The government has come under increasing pressure from senior Tories to take steps to reverse aspects of the mini-budget to allay market concerns.