Liz Truss and Kwasi Kwarteng are set to hold crisis talks amid intense speculation they will have to rip up key aspects of their controversial mini-budget.
The commitment to axe the planned increase in corporation tax is seen as the most likely element to go.
It would be the latest in a series of screeching U-turns performed by the Prime Minister since she entered No 10 little over a month ago – and before she took office.
Here is a look at her previous climbdowns.
Tax cuts for the rich
Truss’s first major U-turn as Prime Minister came when she abandoned plans to axe the 45p rate of income tax for people earning more than £150,000.
Chancellor Kwasi Kwarteng announced the dramatic volte-face on October 3, just hours before his set-piece speech at the Conservative Party conference in Birmingham, to stave off a mounting Tory revolt.
He acknowledged that the Government’s desire to borrow billions to scrap the top rate of tax for high earners had become a “terrible distraction” amid widespread criticism.
The U-turn was seen as a massive blow to Truss and Kwarteng’s standing, coming a little over a week after the tax cut was announced in the Chancellor’s seismic September 23 mini-budget.
The mini-budget triggered turmoil in the financial markets, was criticised by the International Monetary Fund and required an emergency intervention by the Bank of England to support Government bonds.
But it was the 45p rate which attracted the biggest political backlash, with senior Tories including Michael Gove and Grant Shapps criticising it at the conference for offering help to the rich while the country faced a cost-of-living crisis.
Timing of the financial statement
Truss’s Government bowed to pressure to bring forward the publication of Kwarteng’s financial strategy and independent economic forecasts.
On October 10, the Chancellor agreed to set out his medium-term fiscal plan alongside Office for Budget Responsibility data on October 31 – Halloween.
He had been resisting setting out his plan to get the public finances back on track before November 23, but faced growing calls from Tory MPs to move more quickly to calm the markets spooked by the scale of borrowing to fund £43bn of unfunded tax cuts.
Kwarteng had sparked confusion during the Tory party conference when he denied his own allies’ suggestions that he would be bringing forward the statement, drawing accusations of a triple U-turn.
‘Handouts’ to address soaring energy prices
After rejecting giving “handouts” to support people through the cost-of-living crisis during her Tory leadership campaign, Ms Truss completed a U-turn by promising a multibillion-pound package of help with energy bills.
Asked how she would help families with spiralling bills, she told the Financial Times in August: “Of course, I will look at what more can be done. But the way I would do things is in a Conservative way of lowering the tax burden, not giving out handouts.”
But upon entering office, the Prime Minister announced one of the biggest Government handouts in generations.
On September 8, she set out an emergency package costing tens of billions of pounds to help shield households and businesses from soaring energy prices, including preventing the average annual family bill in Britain topping £2,500 for two years.
Regional public sector pay
During her leadership campaign, Truss was forced to abandon a flagship policy to slash £8.8bn from public sector pay outside London, after furious warnings from senior Conservatives that it would be “levelling down” the nation by leaving nurses, police officers and teachers poorer.
She scrapped the plan to pay workers in cheaper regions less than their counterparts in the capital and the South East, a little over 12 hours after making the major announcement.
Afterwards, Truss claimed her policy had been “misrepresented” as she confirmed she would not be going ahead with the regional pay boards.
Truss has a long history of taking firm positions and then backtracking, including over Brexit.
She supported Britain staying in the EU in 2016, but has since turned into a fervent Brexiteer who says she regrets her Remain vote.
Truss has even changed political allegiance.
The Conservatives were not her first political party, having initially had a brush with the Liberal Democrats and using a speech at their 1994 conference to back a motion calling for the abolition of the monarchy.