Government borrowing rises in September

Sterling dropped 1% against the dollar to $1.11, after rallying on Thursday as Prime Minister Liz Truss resigned.

It came as official figures showed government borrowing rose to its second highest September on record.

Meanwhile, people are shopping less than they did before the coronavirus pandemic, according to figures from the Office For National Statistics (ONS).

Retail sales volumes fell more than expected by 1.4% last month, continuing their slide from August, the ONS said.

The pound's latest slide comes after a period of volatile trading for the currency.

It plunged to a record low against the dollar last month, while government borrowing costs rose sharply in the aftermath of the mini-budget. Investors were spooked after the government promised huge tax cuts without saying how it would pay for them.

A fall in the value of the pound increases the price of goods and services imported into the UK from overseas - because when the pound is weak against the dollar or euro, for example, it costs more for companies in the UK to buy things such as food, raw materials or parts from abroad.

A weaker pound can push rising costs higher as well if companies choose to pass on higher prices to customers. For people planning a trip overseas, changes in the pound affect how far their money will go abroad.

Posted on Oct 20, 2022.

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