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.”
Pete Aitken says his daughter Hannah would still be alive if she hadn’t been sent to a series of “failing” mental health hospitals, which made her increasingly unwell.
Warning: This article contains references to suicide
Hannah Aitken was 22 when she took her own life two years ago. Her death has left her family in turmoil.
“I think about Hannah every hour of every day, more than once, every hour, every day,” her dad Pete said.
Throughout the family home are photos, candles and purple flowers, Hannah’s favourite colour. Her parents have planted a tree in the garden where her beloved trampoline once stood.
Pete Aitken, whose daughter Hannah died by suicide in 2023
Hannah had autism and ADHD and struggled with her mental health. In 2017, she was sent to Huntercombe Hospital-Stafford. It was in special measures when she arrived.
Pete says the unit made Hannah worse. “I don’t believe that they gave her any care or treatment there that helped her.”
Over a period of four years, Hannah was sent to six different mental health hospitals. The majority were publicly funded and privately run.
Three were rated by the care regulator, the CQC, either ‘inadequate or ‘requires improvement’. Two of the units were closed down while Hannah was a patient.
“That to me is an indication of how bad the system is, and how bad the care that she received was,” Pete said.
“All they could do was… like prison keep her safe, but not give her any quality of life. They took all that away from her.”
‘I don’t believe that they gave her any care’, Pete says
Over the years, Sky News has investigated failings within the mental health system, including the Huntercombe Group, which ran a number of hospitals.
Hannah emailed Sky News in 2023 following one of our reports to share her story.
She wrote: “I will never forget what I was put through… I put up with so much and it’s only now I realised it wasn’t right, for years I blamed myself.”
Hannah never fully recovered from her hospital admissions. In September 2023, she took a fatal dose of poison, which she had bought online.
Her family are now campaigning for a change in the law governing poisons.
Family photos of Hannah Aitken, who died in 2023
Her dad said: “One gram of this poison is lethal. We found out from Hannah’s inquest she ordered a kilogramme of 99.6% purity.
“There is a legitimate use for it, but we understand that the concentration for that is something like less than 1%.”
Hannah’s death once again raises questions about why the NHS outsources mental health services to failing private providers.
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An NHS England spokesperson said: “Our thoughts are with Hannah’s family at this incredibly difficult time.
“The NHS has repeatedly made clear that all services must provide safe, high-quality care, irrespective of whether they are NHS or independent sector-led, and we continue to work closely with the CQC to monitor, identify and take appropriate action where it is needed.”
Elli Investments Group, the owners of The Huntercombe Group until 2021, has said they regret that these hospitals, which were independently managed, failed to meet expectations
Anyone feeling emotionally distressed or suicidal can call Samaritans for help on 116 123 or email jo@samaritans.org in the UK. In the US, call the Samaritans branch in your area or 1 (800) 273-TALK
UK
Prince William plans ‘ruthless approach’ towards Prince Andrew, as lawyer for Jeffrey Epstein’s victims predicts further leaks
Prince William is planning to take a “ruthless approach” towards Prince Andrew when he is king, according to reports, as a US lawyer predicts the scandal engulfing the royal “is not going away” and more stories will “leak out”.
The Sunday Times suggests William will ban his uncle from “all aspects of royal life” because of the ongoing risk to the Royal Family‘s reputation after a series of damaging revelations.
It comes amid reports that Andrew tried to get the Metropolitan Police to dig up dirt for a smear campaign against his sexual assault accuser Virginia Giuffre back in 2011.
Gloria Allred, who represents many of the victims of the late convicted paedophile Jeffrey Epstein, believes he will not be “let off the hook”.
“This is not going away. Even though he’s no longer a duke, and Sarah Ferguson is no longer a duchess, it’s not going away,” the US lawyer told Sky News.
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Who pushed Andrew to drop his titles?
Andrew relinquished his Duke of York title and remaining honours on Friday evening, after a series of fresh stories linked to the late Ms Giuffre, who was trafficked by Epstein. She died in April, aged 41, with her family saying said she “lost her life to suicide”.
She alleged she was forced to have sex with Andrew when she was 17, allegations he has always denied.
“The fact that Virginia is now deceased – may she rest in peace – doesn’t mean it’s over for Prince Andrew. It’s not over. More will come to leak out,” Ms Allred added.
Ms Giuffre’s posthumous memoirs, which are released on Tuesday, claim Andrew insisted she sign a one-year gag order – to prevent details of her allegations tarnishing the late Queen’s platinum jubilee.
And earlier this week, emails emerged showing that Andrew remained in contact with Epstein, several months after he said he had stopped contact.
The former duke paid to settle a civil sexual assault case with Ms Giuffre in 2022, despite insisting he had never met her.
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Windsor’s take on Prince Andrew
Reports of attempted smear campaign
It has now been reported that Andrew passed Ms Giuffre’s date of birth and social security number to his taxpayer-funded bodyguard in 2011, asking him to investigate.
He is said to have emailed the late Queen’s then-deputy press secretary and told him of his request to his protection officer, and also suggested Ms Giuffre had a criminal record, according to the Mail on Sunday.
Sky News has contacted the Met for comment. A spokesperson for the force told the PA news agency: “We are aware of media reporting and are looking into the claims made.”
The prince’s alleged attempt, on which the Met officer is not said to have acted, came in 2011, hours before the publication of the famous photograph of Andrew with his arm around Ms Giuffre in London, which he has claimed was doctored.
The Mail on Sunday said it obtained the email from disclosures held by the US congress.
“It would also seem she has a criminal record in the states,” Andrew said to the former press secretary, according to one email published by the newspaper. “I have given her DoB and social security number for investigation with XXX the on duty PPO.”
Ms Giuffre’s family responded, saying she did not have a criminal record, the newspaper said.
Read more from Sky News:
How Prince Andrew allegations unfolded
Everything we know about titles decision
William and Camilla’s influential roles
In her book, titled Nobody’s Girl: A Memoir Of Surviving Abuse And Fighting For Justice, she wrote, according to The Telegraph: “As devastating as this interview was for Prince Andrew, for my legal team it was like an injection of jet fuel.
“Its contents would not only help us build an ironclad case against the prince but also open the door to potentially subpoenaing his ex-wife, Sarah Ferguson, and their daughters, Princesses Beatrice and Eugenie.”
The Duke of York and the Prince of Wales at the Duchess of Kent’s funeral last month. Pic: PA
Andrew, who remains a prince and continues to live in the Crown Estate property Royal Lodge, said on Friday that the “continued accusations about me distract from the work of His Majesty and the Royal Family”.
He insisted he was putting his “family and country first” and would stop using “my title or the honours which have been conferred upon me”.
Ms Allred told Sky News she felt Andrew’s statement on Friday, describing the scandal as a “distraction”, was an “insult” to Epstein’s victims.
“What it’s saying [the statement] is it’s continued bad PR for the monarchy,” she said.
“All right, I’m happy about this small consequence that he has to pay… no longer a duke, but look, he’s living a privileged life while many victims are still suffering from the harm that was done by many people involved with Jeffrey Epstein.”
UK
Prince Andrew insisted on ‘gag order’ to stop allegations spoiling Queen’s Platinum Jubilee, memoir claims
Prince Andrew insisted his accuser, Virginia Giuffre, sign a one-year gag order – to prevent details of her allegations tarnishing the late Queen’s platinum jubilee, her memoirs have claimed.
Andrew relinquished his Duke of York title and remaining honours on Friday evening.
It came after discussions with King Charles, in consultation with the Prince of Wales, both of whom wanted to bring an end to the long-lasting scandal.
But, according to The Telegraph, Ms Giuffre’s book, which is due out on Tuesday, is focusing further attention on the sexual assault allegations and the prince’s friendship with paedophile Jeffrey Epstein, which led to the royal’s downfall.
She tells how Andrew’s “disastrous” Newsnight interview with Emily Maitlis was like an “injection of jet fuel” for her legal team, and it raised the possibility of “subpoenaing” his ex-wife Sarah Ferguson, and daughters Princess Beatrice and Princess Eugenie and drawing them into the legal case.
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Prince Andrew’s ’embarrassed’ Royals ‘for years’
The Telegraph also reports Ms Giuffre’s claims that she got “more out of” Andrew than a reported £12m payout and $2m (around £1.4m) donation to her charity because she had “an acknowledgement that I and many other women had been victimised and a tacit pledge to never deny it again”.
The former duke paid to settle a civil sexual assault case with Ms Giuffre in 2022, despite insisting he had never met her.
Ms Giuffre alleged she was forced to have sex with the prince when she was 17, after being trafficked by Epstein. Andrew continues to vehemently deny her allegations.
Read more:
Andrew giving up title is ‘Victory for Virginia’
Everything we know about Andrew losing titles
Prince Andrew: A timeline of events
Queen Elizabeth II was celebrating her platinum jubilee in 2022 – the first British monarch to reach the milestone – as the civil case against her son was gathering pace.
It was settled nine days after she reached the 70th anniversary of her accession.
According to the Telegraph, Ms Giuffre, who died in April, reveals in her book: “I agreed to a one-year gag order, which seemed important to the prince because it ensured that his mother’s platinum jubilee would not be tarnished any more than it already had been.”
Parades, processions, concerts and street parties were held across the UK in celebration of the Platinum Jubilee. Pic: PA
In January 2022, a US judge ruled the civil case against Andrew could go ahead, and the Queen went on to strip him of his honorary military roles, with the prince also giving up his HRH style.
‘Devastating’ interview
His 2019 Newsnight interview, which he hoped would clear his name, backfired when he said he “did not regret” his friendship with convicted paedophile Epstein, who trafficked Ms Giuffre.
Prince Andrew and Virginia Giuffre (then Roberts) in 2001 – a picture the prince claimed had been doctored. Pic: Shutterstock
Andrew also said he had “no recollection” of ever meeting Ms Giuffre and added he could not have had sex with her in March 2001 because he was at Pizza Express with his daughter Beatrice on the day in question.
Ms Giuffre, whose book is called Nobody’s Girl: A Memoir of Surviving Abuse and Fighting for Justice, wrote, according to The Telegraph: “As devastating as this interview was for Prince Andrew, for my legal team it was like an injection of jet fuel.
“Its contents would not only help us build an ironclad case against the prince but also open the door to potentially subpoenaing his ex-wife, Sarah Ferguson, and their daughters, Princesses Beatrice and Eugenie.”
‘Amazed he was stupid enough’
She also told how Andrew had “stonewalled” her legal team for months before settlement discussions began moving very quickly when his deposition was scheduled for March 2022.
Ms Giuffre also wrote she was “amazed” that a member of the royal family would be “stupid enough” to appear in public with the convicted paedophile, after a photo of the pair walking in New York emerged.
Andrew, who remains a prince and continues to live in the Crown Estate property Royal Lodge, said on Friday the “continued accusations about me distract from the work of His Majesty and the royal family”.
He insisted he was putting his “family and country first” and would stop using “my title or the honours which have been conferred upon me”.
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