Liz Truss is poised to sack her chancellor Kwasi Kwarteng and announce plans to raise corporation tax as she abandons key parts of her mini-budget in a bid to reassure the markets.
The chancellor is due to meet the prime minister shortly, with discussions under way in No 10 and No 11 before a public statement by the prime minister.
The government has been left with little choice but to abandon its plans after the markets priced in a reversal of its position, with sterling responding positively to a series of leaks.
Kwarteng flew back early from Washington overnight. The government is expected to announce plans to increase corporation tax later this afternoon, with the prime minister potentially making a public statement.
One government source said that corporation tax was likely to rise but said it could still be less than the 25 per cent that was planned by the previous government. Other measures in the mini-budget could soon be reversed.
The government is acting to restore market confidence after Kwarteng used his mini-budget to announce £45 billion worth of unfunded tax cuts.