'It's a disgrace': The Manc holidaymakers, businesses and mortgage holders in 'fear and panic' over the pound's slump
The UK economy has been plunged into turmoil following Kwasi Kwarteng's disastrous mini-budget. Sterling fell to an all-time low against the dollar and the Bank of England was forced to intervene to prevent pension funds from collapsing as investors dumped UK bonds.
While a sell-off in UK bonds drives up the cost of government borrowing, fears that the planned tax cuts, the energy price guarantee and a weaker pound will drive up inflation put the Bank of England under pressure to raise interest rates to control it. "I can remember when you used to get almost €2 to a pound - it wasn't that long ago. That was when foreign holidays really were cheap."
Nick Boden, head of foreign currency provider Post Office Travel Money, warned that sterling's volatility makes it impossible to predict how exchange rates will behave in the coming weeks. As sterling sank to record lows, buying 500 US dollars cost around £480 at some points on Monday, compared with approximately £440 on the same day last week.
"Trying to convert sterling to dollars at the moment is difficult," said Danny, speaking from a business trip to Thailand. "[The fall in sterling] has blown our finances completely out of the water. We're having to do everything all over again from fresh. It's put us in a very tricky situation. "What I'd like is for the government to identify the bad parts which are hitting businesses like ours and change them in time for the announcement in November."
"But the other side of the coin is that exporters all of a sudden are now looking more lucrative. If before a firm was buying from Germany for instance, it might now make sense to buy from a British firm." And he says the reversal of the National Insurance rise and the scrapping of the health and social care levy announced in the mini-budget will make it cheaper for firms to recruit. But the chamber feels more could still be done.
That's bad news for home owners looking for a new mortgage deal and first-time buyers looking to get on the housing ladder. Someone who fixed at 2% two years ago could be looking at a remortgage rate at 5% by next week. If they had a £200,000 mortgage over 25 years, they'll see their monthly payments got up by more than £300.
"But we're quite lucky because we don't have a big mortgage. There are people here in the same situation whose mortgages are £1,000 a month."
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