AT its record low of $1.0327 in Asian trading yesterday, the pound was down a jaw-dropping 10 cents on its close last Thursday, the day before Chancellor Kwasi Kwarteng unleashed a frenzy in financial markets with his mini-Budget.

The pound had on Friday following Mr Kwarteng’s “Growth Plan” – which included a slew of tax cuts and the reversal of a planned rise in corporation tax which will in aggregate cost tens of billions of pounds a year – sunk to what were then fresh 37-year lows below $1.09. It ended more than four cents lower on the day – a huge reaction relative to normal movements when UK governments have brought forward Budgets or other fiscal statements. The subsequent decline to yesterday’s record low was even more dramatic.

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The precipitous nature of the plunge highlights the gravity of the fears over the stability of the UK’s public finances triggered by the mini-Budget, with experts not persuaded at all by the Tories’ claim that the measures will raise the annual trend rate of growth hugely to 2.5 per cent. Financial markets also appeared unnerved by the Government’s decision that the independent Office for Budget Responsibility should not, last Friday, publish economic and fiscal forecasts incorporating the effects of the expensive measures unveiled by the Liz Truss administration. The mini-Budget measures fuelled inflation fears. And the plunge in sterling, which will itself have an inflationary effect, has compounded these worries.

Sterling was by 5pm yesterday off its worst levels and trading around $1.0688, but this was nevertheless down 6.35 cents on last Thursday’s close.

The pound’s tumble fuelled speculation of an emergency hike in UK base rates from the Bank of England, hard on the heels of a half-point rise to 2.25% only last week, to combat the inflationary effects. However, Bank Governor Andrew Bailey said yesterday afternoon the Monetary Policy Committee would make a full assessment and “act accordingly” at its next scheduled meeting, which is in early November.

Financial markets have moved to price in base rates of 6% next year. Base rates were at an all-time low of 0.1%, before the MPC started raising them last December.

Households with substantial borrowings linked to the base rate have already seen their interest payments surge. They are now faced with projections of further sharp rises in interest rates.

Savers have seen interest rates on some products surge as the inflation crisis has built but, like borrowers, their household budgets have been hammered by soaring prices, crucially for energy and food, as a grim winter looms.