How the falling pound affects you – and who the winners and losers are
Friday’s mini-budget that promised billions in tax cuts and a multi-billion pound energy price cap has seen the value of the pound plummet against foreign currencies.
The new prime minister and her chancellor’s decision to cut various taxes by a combined £45bn, alongside a cap on energy prices that will cost taxpayers £60bn has resulted in a loss of market confidence.
Lenders withdraw mortgage profits; live pound updates
That loss of confidence in the government’s ability to pay back the billions they are spending means the Bank of England is likely to raise interest rates – in a desperate bid to bring down inflation.
This all has an effect on Britain’s day-to-day spending. Here, Sky News looks at who will suffer and who will benefit from the pound’s slump.
Petrol
Fuel is traded in dollars.
This means that a low pound will buy less fuel, forcing prices at UK forecourts to rise.
Drivers will have noticed a recent dip in prices at the pumps – compared with this summer when they approached £2 a litre for diesel.
But the slump in value of the pound will likely wipe out that fall, which was a welcome relief for many.
According to the AA, a pound that equals $1.08 will mean an extra 13.5p per litre of petrol.
That would add around £7.50 to the cost of filling up an average 55-litre car, when factoring in VAT.
An AA spokesman added that had it not been for former Chancellor Rishi Sunak’s decision to cut fuel duty by 5p in March, motorists would have likely seen an even bigger increase in the price per litre – of around 18.5p.
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Why did the pound fall to a record low?
Energy
Gas is also traded in dollars and therefore also suffers from a poor exchange rate.
As with oil, wholesale prices have dropped internationally since the start of the war in Ukraine, but with a weak pound, similarly the UK won’t experience the benefits.
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, tells Sky News: “At this stage, this won’t affect bill payers directly, because the energy price cap is set below international energy prices, so we’ll be paying less anyway.
“Instead it will have an impact on how much the guarantee will cost the government.”
The more the price cap costs the government, the less confidence the market will have in the government’s capacity to pay it back, causing the original problem to spiral further.
Food
Any goods imported to the UK from abroad will cost more when the pound is weaker.
According to the government’s most recent food security report, the UK imports around 45% of its food.
This has proven a major problem during the Ukraine war, with grain exports unable to leave the country for several months this year.
Along with the dollar, the pound is also faring badly against the Euro, which will mean European-grown fruit and veg prices will increase.
Produce grown further afield, such as bananas, will also go up.
Not all retailers will pass all of that cost onto their customers, however.
Supermarkets are often the last to increase their prices off the back of rising costs, as they try to remain affordable, and often buy stocks in advance to mitigate sudden market shocks.
But Ms Coles cautions: “Supermarkets have warned that although they are already absorbing a great deal of the increased costs of supply, they have to pass some of it on.”
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Why does the weak pound matter?
Tech
Most of our tech gadgets, such as smartphones and tablets, are manufactured abroad.
Apple, for example, is based in California, but uses parts manufactured in China and Taiwan.
Again, a week pound will mean these foreign-made products cost more in the UK.
Apple has already increased the price of its latest iPhone range. The iPhone 13 started at £949 when it launched last year. The iPhone 14 range is retailing at £1,099 – a 16% increase.
Holidays abroad
The most obvious place consumers will experience the slump in the pound is at the bureau de change.
Holidaymakers bound for the US will get particularly less for their money than they used to – but with the pound also down against the Euro, holidays to Europe will also be more expensive.
With the cost of fuel also on the rise, airlines and package holiday providers may also increase their prices to mitigate costs.
Mortgages
A weak pound means inflation – which is already at 10% – getting even higher.
When inflation is high, the Bank of England tries to bring it down by increasing interest rates.
This higher price of borrowing is designed to encourage people to borrow less, spend less, and save more.
Currently forecasts predict interest rates hitting 6% by November, which will mean huge increases in people’s mortgage repayments.
Halifax, the country’s largest mortgage provider, is removing fee-paying mortgages from Wednesday. These allow people to pay a fee in exchange for a lower interest rates.
Virgin Money and Skipton Building Society have withdrawn all their mortgage products until they have more certainty.
The two million people in the UK already on tracker and variable mortgages will see far more of their monthly pay packet spent on repayments.
And those coming to the end of a fixed rate or hoping to buy for the first time will have fewer, more expensive deals to choose from.
“The issue is the fact that fixed rate mortgages don’t just depend on the rate today, they also depend on rate expectation,” Ms Coles explains.
“The dramatic overnight change in market expectations of future rates has ramped up the cost of doing business, and lenders are taking a break to reassess and reprice.”
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Why some mortgage providers are pulling products
Pensions
People approaching retirement could suffer from UK bonds – or gilts – being sold off in response to the pound’s fall.
Some investors automatically switch people’s pensions from stocks to government bonds as they get closer to retirement age, which will leave them with a smaller pot in the current climate.
Pensioners living abroad will also suffer notably – as their pensions are paid in pounds but their expenses are in stronger currencies.
UK exporters
British businesses that sell their products and services abroad will benefit from the pound’s slump as foreign buyers look to take advantage of cheaper prices.
This will see the FTSE 100 companies benefit, as much of their money is made overseas, Ms Coles says.
It could also provide much-needed help for smaller UK businesses struggling with the increased costs of Brexit.
Local tourism
More holidaymakers could be drawn to the UK from abroad by the promise of a cheaper holiday.
While Britons get less for their money at the bureau de change, inbound tourists will get more.
Read more:
The good and the bad news on the pound
Five reasons the pound ‘doom loop’ matters
For example, a London hotel room that cost $200 (£186) at the start of 2022 now only costs $150.
Britons could also return to the ‘staycation’ trend seen during the COVID pandemic and also help boost the economy by supporting tourism and hospitality businesses at home.
Hedge funds
Hedge funds employ a strategy called ‘short selling’ or ‘shorting’ to take advantage of falling market prices.
It involves borrowing shares in a firm and selling them with a view to buying them back at a profit when prices fall.
Ms Coles says: “Plenty of hedge funds were shorting the pound before the fall – based on the belief that the markets had underestimated how long inflation would stick around for.
“So these paid off when the pound tumbled.”
UK
Nurse Sandie Peggie who complained about sharing changing room with transgender doctor wins part of employment tribunal
A nurse who complained about sharing a changing room with a transgender doctor has won part of her employment tribunal against NHS Fife, although several claims were dismissed.
Sandie Peggie took action against the health board and transgender medic Dr Beth Upton after she was suspended from her job at Victoria Hospital in Kirkcaldy following a row with her colleague on Christmas Eve 2023.
Ms Peggie, who has worked for the NHS for 30 years, was placed on special leave after Dr Upton made an allegation of bullying and harassment, and cited concerns about patient care.
The nurse lodged a claim against NHS Fife and Dr Upton, citing the Equality Act 2010, including sexual harassment, harassment related to a protected belief, indirect discrimination, and victimisation.
The employment tribunal hearings took place in Dundee before Judge Sandy Kemp earlier this year.
In a written judgment on Monday, the harassment claim was upheld against NHS Fife, but allegations of discrimination, indirect discrimination and victimisation were dismissed.
The claims against Dr Upton did not succeed and were dismissed.
Dr Beth Upton arriving at the tribunal in February. Pic: PA
Ms Peggie stated: “I am beyond relieved and delighted that the tribunal has found that my employer Fife Health Board harassed me after I complained about having to share a female-only changing room with a male colleague.
“The last two years have been agonising for me and my family.
“I will have much more to say in the coming days once I’ve been able to properly consider the lengthy judgment and discuss it with my legal team.
“For now, I am looking forward to spending a quiet few days with my family.”
Ms Peggie paid tribute to her “incredible” legal team, which included lead counsel Naomi Cunningham, junior counsel Dr Charlotte Elves, and solicitor Margaret Gribbon.
She added: “There are many others I would like to thank and will do so in the coming days.”
Read more:
NHS Fife chief announces early retirement ahead of ruling
The tribunal found that NHS Fife had harassed Ms Peggie by failing to revoke the grant of permission to Dr Upton on an interim basis after the nurse complained, for the period until different work rotas took effect so that they would not work together and said that, as a result, Dr Upton was in the changing room when the claimant was present on two occasions.
It also found the board had harassed Ms Peggie by taking an unreasonable length of time to investigate the allegations against her; by making reference to patient care allegations against her on 28 March 2024; and giving an instruction to her not to discuss the case, until a further message a little over two weeks later which confirmed that applied only to the investigation.
A separate hearing on remedy – which could see Ms Peggie receive financial compensation – will take place at a later date.
NHS Fife said it had been a “complex and lengthy process”.
The health board added: “The employment tribunal unanimously dismissed all of the claimant’s allegations against Dr Upton and all of the allegations against the board apart from four specific aspects of the harassment complaint.
“We will now take time to work through the detail of the judgment alongside our legal team to understand fully what it means for the organisation.
“We want to recognise how difficult this tribunal has been for everyone directly and indirectly involved.
“Our focus now is to ensure that NHS Fife remains a supportive and inclusive environment for all employees and our patients and to deliver health and care to the population of Fife.”
Retired footballer Joey Barton has been sentenced over X posts he sent to football pundits Eni Aluko and Lucy Ward, along with broadcaster Jeremy Vine.
Barton, 43, had been found guilty of six counts of sending a grossly offensive electronic communication with intent to cause distress or anxiety.
He was sentenced to a six-month prison sentence, suspended for 18 months, at Liverpool Crown Court on Monday.
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Watch judge’s remarks in Barton sentencing
The former Manchester City, Newcastle United and Rangers midfielder had claimed he was the victim of a “political prosecution” and denied his aim was to “get clicks and promote himself”.
But the jury decided Barton, capped once for England in 2007, had “crossed the line between free speech and a crime” with the six posts he made on the social media platform.
The prosecution argued that Barton, who has 2.5 million followers, “may well be characterised as cutting, caustic, controversial and forthright”.
Peter Wright KC continued: “Everyone is entitled to express views that are all of those things.
“What someone is not entitled to do is to post communications electronically that are – applying those standards – beyond the pale of what is tolerable in society.”
Barton denied 12 counts of sending a grossly offensive electronic communication with intent to cause distress or anxiety between January and March last year.
He was found guilty on six counts, but cleared of another six.
Eni Aluko at London’s Royal Courts of Justice last year for her libel claim against Barton. Photo: PA
In one post in January 2024, Barton compared Aluko and Ward to the “Fred and Rose West of football commentary”, and superimposed the women’s faces on a photograph of the serial murderers.
He also described Aluko as being in the “Joseph Stalin/Pol Pot category”, suggesting that she had “murdered hundreds of thousands, if not millions, of football fans’ ears”.
The jury found him not guilty in relation to the comparison with the Wests, Stalin and Pol Pot, but decided the superimposed image was grossly offensive.
Jeremy Vine. Pic: PA
Another message allegedly suggested Vine had a sexual interest in children, after the broadcaster posted a question relating to the posts about the football commentators asking whether Barton had a “brain injury”.
The court heard Barton replied to Vine’s tweet with a post referring to him as “you big bike nonce” and made references to convicted child sex offender Jeffrey Epstein.
The ex-footballer told the court the posts were “dark and stupid humour” and “crude banter”. He also said he had no intention of implying Vine was a paedophile.
Sentencing, the Honorary Recorder of Liverpool, Judge Andrew Menary KC, told Barton: “Robust debate, satire, mockery and even crude language may fall within permissible free speech.
“But when posts deliberately target individuals with vilifying comparisons to serial killers or false insinuations of paedophilia, designed to humiliate and distress, they forfeit their protection.
“As the jury concluded, your offences exemplify behaviour that is beyond this limit – amounting to a sustained campaign of online abuse that was not mere commentary but targeted, extreme and deliberately harmful.”
Barton was also given a two-year restraining order preventing him from contacting Aluko, Ward or Vine, or publishing any reference to them on a social media platform or broadcast platform.
He will also have to carry out 200 hours of unpaid work in the community and pay prosecution costs of £23,419.
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