The UK economy has been plunged into turmoil following Kwasi Kwarteng's disastrous mini-budget. Sterling fell to an all-time low against the dollar and the Bank of England was forced to intervene to prevent pension funds from collapsing as investors dumped UK bonds.
A weak pound reduces our buying power on imported goods. It means everything from petrol to food becomes more expensive, as firms pass their price hikes on to customers. It also makes foreign travel more expensive, as you get less for your money abroad.
So, continued declines in the value of the pound threaten to worsen inflation, exacerbating the worst cost-of-living crisis in decades. As this week progressed, the pound clawed back losses. But there remains considerable uncertainty in the air, in the wake of markets' terrible reaction to the government's plans for debt-fuelled tax cuts.
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While a sell-off in UK bonds drives up the cost of government borrowing, fears that the planned tax cuts, the energy price guarantee and a weaker pound will drive up inflation put the Bank of England under pressure to raise interest rates to control it.
Higher interest rates will drive up the cost of mortgages, household debt, and business loans. With all that in mind, this week we spoke to businesses, holidaymakers, home owners and house buyers in Greater Manchester to see how events were affecting them...
Holidaymakers
On Tuesday morning Jimmy and Brenda Shields, from Salford, were flying to Cyprus on holiday. "It's a disgrace," said Jimmy, stood in the Terminal 2 departure hall at Manchester Airport.
"The other day we were getting €1.14 to a pound, now it's €1.09. We will have to watch what we spend a bit more because the conversion rate at the minute is no good.
"I can remember when you used to get almost €2 to a pound - it wasn't that long ago. That was when foreign holidays really were cheap."
Another couple, who asked not to be named, were going to Egypt on an all-inclusive holiday. "We're going to change our money when we get there," they said.
"That's what we always do, because you get a much better rate generally, but I think it's going to be pretty bad this time. We have a holiday home in Bulgaria that we normally go to for seven weeks at a time, but this time we're going all-inclusive purposefully because of the exchange rates.
"It's disgusting really. I think they're deliberately trying to drive up the interest rates, but they are just going to put so many people into debt."
Nick Boden, head of foreign currency provider Post Office Travel Money, warned that sterling's volatility makes it impossible to predict how exchange rates will behave in the coming weeks. As sterling sank to record lows, buying 500 US dollars cost around £480 at some points on Monday, compared with approximately £440 on the same day last week.
"Our advice for people planning overseas trips is to watch rate movements carefully in the weeks leading up to their departure, and change money at times when the rates rise," said Mr Boden. But there was some good news for tourists heading to certain European destinations.
"For those Britons planning a late summer break to Turkey, sterling will still buy over 53% more Turkish lira than a year ago," said Mr Boden. "City break holidaymakers visiting Budapest will get almost 8% more Hungarian forints for their pounds."
Business
Danny Manu is the CEO and founder of Manchester-based tech firm Mymanu. About 90% of the wireless headphone start-up's revenue comes from overseas, the vast bulk of which is in dollars.
"Trying to convert sterling to dollars at the moment is difficult," said Danny, speaking from a business trip to Thailand. "[The fall in sterling] has blown our finances completely out of the water. We're having to do everything all over again from fresh. It's put us in a very tricky situation.
"I'm checking the exchange rate every day, every hour. Even here in Thailand I'm turning on the news trying to find out what's happening."
All of Mymanu's products are manufactured overseas and Danny says the cost increases have been almost immediate. To try offset some of that the firm has changed its pricing to dollars, even for customers in the UK.
Danny says he'd like to see the Chancellor change tack in time for the November budget. "There was good and bad in the mini-budget," said Danny.
"What I'd like is for the government to identify the bad parts which are hitting businesses like ours and change them in time for the announcement in November."
Harry Thomasson, works for King Street-based foreign exchange and currency risk firm Corpay. "There's a lot of fear and panic at the minute," he said. "A massive part of our work is hedging, trying to protect our clients against this type of volatility.
"A lot of our clients are importers and for them the cost of business just increased massively. I've just been speaking to a client who's buying something from the States. Last week it was £200,000, now it's almost £240,000.
"Sterling's been in a steady decline for a while now, especially against the dollar. Even when people purchase from the Far East it's usually in dollars so it's affecting so many areas.
"But the other side of the coin is that exporters all of a sudden are now looking more lucrative. If before a firm was buying from Germany for instance, it might now make sense to buy from a British firm."
Subrahmaniam Krishnan-Haihara, head of research at Greater Manchester Chamber of Commerce, said a declining pound would likely result in the cost of 'pretty much everything' going up. "It's not just imports from the US," he said.
"A substantial proportion of all trade is dollar demarcated, so that will hit UK imports irrespective of which country we are importing from. We may not see price rises immediately, it might not be next week, but the fall of the pound is going to push up the price of pretty much everything."
But it's not all doom and gloom. The job market in Greater Manchester is still fairly strong, with around of 85% of current vacancies for full-time positions, Subrahmaniam says.
And he says the reversal of the National Insurance rise and the scrapping of the health and social care levy announced in the mini-budget will make it cheaper for firms to recruit. But the chamber feels more could still be done.
"We would like to see absolute certainty and clarity in how the energy support package for business is going to work," Subrahmaniam said. "There's no cap for businesses at the moment, just a discount, so if the price keeps going up you'll see businesses pay more and more.
"And businesses need more support for training and development of the workforce. There is a labour shortage, so businesses are struggling to recruit. If they can provide the right training and support that will be beneficial for everyone."
Housing market
The turmoil in the markets has led some experts to predict interest rates could almost treble to six per cent by next year. It's also seen lenders pull around 40% of available mortgages from the market.
That's bad news for home owners looking for a new mortgage deal and first-time buyers looking to get on the housing ladder. Someone who fixed at 2% two years ago could be looking at a remortgage rate at 5% by next week. If they had a £200,000 mortgage over 25 years, they'll see their monthly payments got up by more than £300.
Aga Pietrzak, 43, lives in a one-bedroom apartment in Albion Works in Ancoats with her two young children. Her fixed rate deal ended last year, but she's currently unable to get a new mortgage because work to replace cladding on her building is ongoing, meaning she's unable to get the required safety certificate.
And all the while her mortgage is getting more and more expensive. "This time last year we were paying around £400 a month, but now it's 25% more," she said.
"When I first started looking for a new deal it was about 3%, then the market changed and it was 3.4%, then 3.7%, now it's 4% and now they're predicting it's going to to 6%. I'm still nowhere near securing a new deal through no fault of my own and all the time it's getting more and more expensive.
"But we're quite lucky because we don't have a big mortgage. There are people here in the same situation whose mortgages are £1,000 a month."
First-time buyer Andrew, 30, from Sale, has a mortgage in principle with Nationwide. But following the crash he's now wondering whether he should - or can even afford - to go ahead.
"It's so irritating knowing that interest rates have risen and now I feel super pressured to make a life changing decision quickly - or I'll be priced out of the market," Andrew said. "I also feel like these changes are hitting the first time buyers hardest because there's already such a high barrier to entry into owning a house with the prices at record highs, so first time buyers don't already have equity.
"I'm concerned that I'm overextending with my potential purchase and that I'm going to end up losing my house in a few years. I'm worried about keeping up with mortgage payments and that if I buy now, houses will plummet within the next year and I'll be screwed."
House prices have surprised many by continuing to rise during the cost-of-living crisis as demand outweighed supply.
But the expected interest rate hike could see a slowdown in the market and that's led some property experts to predict house prices could fall by as much as 20 per cent next year. Jamie Thompson of Openshaw-based Jamie Thompson Mortgages said we could see a 'cliff edge drop in property prices'.
"The biggest factor in property price inflation has been the availability of mortgages," he said. "More and more lenders increasing their maximum loan sizes and making their criteria more flexible in the past 12 months has been a major factor in pushing prices higher and higher.
"Now that dozens of lenders have withdrawn all products, this could be the catalyst for a cliff edge drop in property prices."
Rob Peters, director of Altrincham-based Simple Fast Mortgages believes the property market could be 'tested like never before'. "If interest rates reach 6%, this will certainly price some buyers out of the market and put downward pressure on property values," he said.
"Is the British demand for property strong enough to overpower a 6% interest rate? I am not sure."
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