Jeremy Hunt is a government veteran who has served as former foreign secretary and health secretary, and ran unsuccessfully to lead the Conservative Party in 2019.
British Finance Minister Kwasi Kwarteng has confirmed that he had been sacked by Prime Minister Liz Truss, becoming the third chancellor to leave the government this year.
"You have asked me to stand aside as your Chancellor. I have accepted," Kwarteng said in a letter to Truss Friday, which he published on Twitter.
Truss appointed former Cabinet minister Jeremy Hunt as new finance minister.
Speaking in Washington on Thursday, Kwarteng had insisted that his job was safe. "I'm not going anywhere," he said.
Kwarteng was due to have stayed in Washington this weekend to conclude annual meetings of the International Monetary Fund and World Bank.
But UK broadcasters showed live footage of Kwarteng's British Airways plane landing at Heathrow airport a day early, after Truss held hurried meetings with her own financial advisors on Thursday in his absence.
"You have asked me to stand aside as your chancellor. I have accepted," Kwarteng wrote in a letter to Truss, while insisting that their economic programme was needed because "the status quo was simply not an option".
READ MORE: British government takes U-turn on tax plan amid backlash
October 14, 2022
'Economic policy in tatters'
Financial upheaval sparked by the new government's September 23 plan to slash taxes - financed via billions in more borrowing - has subsided somewhat since the Bank of England intervened in bond markets.
But the central bank was adamant it would end its bond-buying spree on Friday, and market analysts said only a bigger climbdown by Truss following Kwarteng's disastrous budget announcement last month would avert fresh panic.
Tony Travers, from the London School of Economics, told AFP news agency Kwarteng had been made "the fall guy for the government's mistakes" but the sacking had not taken the pressure off Truss or calmed the Tories.
"It's very hard to see them coming back from this" by the next election, he added.
The promised tax cuts were the centrepiece of Truss's successful pitch to Tory party members that she rather than rival Rishi Sunak was the best candidate to replace Johnson.
That programme now lies in tatters, and Truss's judgement is in question more than ever, after Sunak's warnings were entirely vindicated: higher borrowing to pay for tax cuts served only to terrify the markets and drive up borrowing costs for millions of Britons.
For many pundits, the self-inflicted damage risks proving terminal for Truss and her hard-right platform.
"This is a government in meltdown and an economic policy in tatters, and frankly I think the Conservative party should be hanging their head in shame at what it's putting the country through," senior Labour MP Ed Miliband told Sky News.
READ MORE: Pound slumps against dollar amid UK recession fears