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| Pound sinks as UK economic uncertainty rises | |
| (31 minutes later) | |
| The pound fell against the dollar on Friday morning as new figures showed a gloomy picture for the UK economy. | |
| Sterling dropped 1% against the dollar to $1.11, after rallying on Thursday as Liz Truss announced her resignation. | |
| It came as official figures from the Office for National Statistics showed government borrowing rose to its second highest September on record. | |
| Meanwhile, people are shopping less than they did before the coronavirus pandemic. | |
| Retail sales volumes fell more than expected by 1.4% last month, continuing their slide from August. | Retail sales volumes fell more than expected by 1.4% last month, continuing their slide from August. |
| "Consumers are now buying less than before the pandemic," Darren Morgan, from the Office for National Statistics (ONS) which released the figures, said. | "Consumers are now buying less than before the pandemic," Darren Morgan, from the Office for National Statistics (ONS) which released the figures, said. |
| He added: "Retailers told us that the fall in September was partly because many stores were closed for the Queen's funeral, but also because of continued price pressures leading consumers to be careful about spending." | He added: "Retailers told us that the fall in September was partly because many stores were closed for the Queen's funeral, but also because of continued price pressures leading consumers to be careful about spending." |
| The cost of living crisis continues to squeeze household budgets, with prices rising faster than average wages. | |
| Have you limited your retail spending? | |
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| Inflation - the rate at which UK prices rise - surged to 10.1% last month and is expected to climb further. | Inflation - the rate at which UK prices rise - surged to 10.1% last month and is expected to climb further. |
| Mr Morgan, director of economic statistics, said all types of shops saw sales drop with food stores particularly hard hit. | Mr Morgan, director of economic statistics, said all types of shops saw sales drop with food stores particularly hard hit. |
| Energy bills | Energy bills |
| The UK is borrowing billions of pounds to limit energy bill rises for households and businesses. | |
| Borrowing - the difference between spending and tax income - was £20bn last month, up £2.2bn from a year earlier, the Office for National Statistics (ONS) said. | Borrowing - the difference between spending and tax income - was £20bn last month, up £2.2bn from a year earlier, the Office for National Statistics (ONS) said. |
| It is the second highest September borrowing since monthly records began in 1993, the ONS said. | It is the second highest September borrowing since monthly records began in 1993, the ONS said. |
| The figure is lower than in September 2020, at the height of the coronavirus pandemic, when the government was borrowing to fund schemes such as furlough, it said. | The figure is lower than in September 2020, at the height of the coronavirus pandemic, when the government was borrowing to fund schemes such as furlough, it said. |
| Energy bills forecast to rise above £4,000 in April | Energy bills forecast to rise above £4,000 in April |
| Energy bill help to be reduced from April | Energy bill help to be reduced from April |
| Millions of people struggling to pay their bills | Millions of people struggling to pay their bills |
| Borrowing set to rise | Borrowing set to rise |
| But economists warned that government borrowing is set to rise further in the coming months. | But economists warned that government borrowing is set to rise further in the coming months. |
| The Office For Budget Responsibility (OBR) makes independent forecasts on what impact government decisions on things like tax and spending will have on borrowing and growth. | The Office For Budget Responsibility (OBR) makes independent forecasts on what impact government decisions on things like tax and spending will have on borrowing and growth. |
| It is due to issue its latest forecast on 31 October when the chancellor delivers his economic plan detailing its spending plans. | It is due to issue its latest forecast on 31 October when the chancellor delivers his economic plan detailing its spending plans. |
| Carl Emmerson, Deputy Director of think tank the Institute for Fiscal Studies (IFS), said so far for the first half of the year government borrowing was almost as expected but warned it was likely to rise much higher. | Carl Emmerson, Deputy Director of think tank the Institute for Fiscal Studies (IFS), said so far for the first half of the year government borrowing was almost as expected but warned it was likely to rise much higher. |
| "But this is little guide to how much borrowing will be over the whole of this financial year, as the huge cost of government support for household and business energy use only began in earnest this month." | "But this is little guide to how much borrowing will be over the whole of this financial year, as the huge cost of government support for household and business energy use only began in earnest this month." |
| The IFS predicts borrowing this year could reach almost £200bn, "nearly £100bn more than the OBR forecast," he added. | The IFS predicts borrowing this year could reach almost £200bn, "nearly £100bn more than the OBR forecast," he added. |
| What does the Office for Budget Responsibility do? | What does the Office for Budget Responsibility do? |
| Michal Stelmach, senior economist at KPMG UK, also warned that government borrowing was expected to "only worsen from October onwards". | Michal Stelmach, senior economist at KPMG UK, also warned that government borrowing was expected to "only worsen from October onwards". |
| This was to due the government's energy price guarantee for households and businesses, on top of the second cost of living instalment and the support for pensioners, he said. | This was to due the government's energy price guarantee for households and businesses, on top of the second cost of living instalment and the support for pensioners, he said. |
| The Chancellor, Jeremy Hunt, said: "To stabilise markets, I've been clear that protecting our public finances means difficult decisions lie ahead. | The Chancellor, Jeremy Hunt, said: "To stabilise markets, I've been clear that protecting our public finances means difficult decisions lie ahead. |
| "We will do whatever is necessary to drive down debt in the medium term and to ensure that taxpayers' money is well spent, putting the public finances on a sustainable path as we grow the economy." | "We will do whatever is necessary to drive down debt in the medium term and to ensure that taxpayers' money is well spent, putting the public finances on a sustainable path as we grow the economy." |