Pound falls below $1.10 for first time since 1985 following mini-budget

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The pound has fallen below $1.10 for the first time since 1985 as investors took fright at the prospect of a surge in government borrowing to pay for Kwasi Kwarteng’s sweeping tax cuts.

Sterling was down by more than two cents agains the dollar to a fresh 37 year low as fears over the future path for the public finances also triggered a surge in government borrowing costs.

The FTSE 100 was down more than 2% at 6,989 while the FTSE 250, which includes more domestic-focused firms, also fell more than 2%.

The sharp sell-off followed a raft of tax cutting measures announced by the chancellor, in the biggest giveaway in 50 years. Measures included the scrapping of the top 45% rate of income tax, which currently applies to those earning more than ?150,000 a year.