Isabella Allen
BBC News

Businesses that rely on importing products from abroad have been telling me how worried they are about the falling value of the pound.

Tim Goodall, managing director of Islabikes in Ludlow, Shropshire, buys almost all of his stock in US dollars and says a weak pound is “painful, really painful.”

"Last week, prices effectively increased by nearly 5% in a matter of hours - and that’s on top of having already gone up by 20% since January. We are at the whim of the exchange rates.”

In the past, Tim would’ve put his prices up in response to a weak pound. But he’s much more nervous about doing that this time, because of the crunch people are facing.

“So far this year, we’ve absorbed the increase in our cost prices," he says.

“The optimist in me hopes that things will get better. At the moment I’m struggling to see how this is going to play out.”

Pleading for some stability, he says he's grateful the Bank of England stepped to stabilise market conditions in when it did.

The pound has gained a little ground in afternoon trading, rising in value to more than $1.09.

However, this is likely to be more to do with a weaker dollar, rather than Liz Truss's comments this morning.

The prime minister said the government would stick with its tax-cutting plans, to try to boost economic growth.

But there has been criticism: Ipek Ozkardeskaya, senior analyst at Swissquote online bank, said there was little trust or confidence in the government.

The chancellor says the government will be "sticking" to its plan to grow the economy.

"We are sticking to the growth plan and we are going to help people with energy bills," he said.

"That's my two top priorities", he told reporters, as he prepared to visit a local business in Darlington.

The chancellor's comments come after Prime Minister Liz Truss this morning defended the mini-budget - it has been criticised by the IMF, experts and Labour.

With the vast majority of households set to see their energy prices rise on 1 October, consumer expert Martin Lewis says there are some things people can do to manage the costs:

• Get a meter reading in beforehand. For people who pay by direct debit or in receipt of bills, their bills are estimated and assigned to a certain period –taking a reading just before means there is no estimate so no discrepancies
• Don’t do it on the day. Previously firms' websites crashed with the sheer volume of people trying to enter their readings, leaving many frustrated and the most vulnerable unable to access help
• You don't need to do a meter reading if you have a working smart meter or pre-payment meter or fixed deal where the price won’t be changing
• Those on pre-payment meters may be able to keep current prices into October and even November if you top up now. This will not work for gas meters, smart electrical pre-payment meters or E.On or Scottish Power
• You can read our explainer on the cap and bills here.

As for mortgages, Lewis advises anyone on a variable rate or fixed rate that is coming to an end soon, to do the following:

• Get on a comparison website to see what’s out there
• Talk to your existing lender to see what they will offer you
• Talk to a good mortgage broker to help you through it
• If you're on a fixed deal ending in a year’s time, you might want to talk to a broker about whether it’s worth paying the early redemption penalties and fixing now for longer

Image source, Reuters

If you're just joining us, here's a quick rundown of today's main developments:

• Prime Minister Liz Truss has defended the government's spending and tax-cut plans during a raft of BBC local radio interviews earlier today - following days of market turmoil
• Truss said the energy package announced in her chancellor's mini-budget on Friday would tackle high bills and reduce inflation by 5% - which in turn would help to lower food prices
• And she insisted the tax-cutting measures would lead to long-term economic growth
• The prime minister said fracking is "perfectly safe" but will only go ahead where locals agree to it
• She confirmed the government remains committed to plans to send some asylum seekers to Rwanda
• Referring to a market intervention from the Bank of England yesterday, former governor Mark Carney said the Bank "stepped in at the point where the system was about to not function"
• When asked if further intervention by the Bank would be necessary, the Bank's current governor, Andrew Bailey, said he could not answer
• Chief Secretary to the Treasury Chris Philp said the government would not bring forward its fiscal plan due to be delivered in November

Kevin Peachey
Personal finance correspondent

A further 321 mortgage products were withdrawn from sale overnight, according to the financial information service Moneyfacts.

That comes on top of the 935 products taken off the shelf the previous night, which was a daily record since Moneyfacts’ comparable records began in 2011.

Since the mini-budget on Friday, 1,621 residential mortgage deals have been pulled from sale, leaving 2,340 available. That is a 41% fall.

Lenders are taking deals off the market amid the current turmoil as they try to work out the level of future interest rates. They will then re-price their fixed rate deals accordingly.

An estimated 300,000 people come off fixed deals every three months, although some analysts suggest there could be a higher number – about 375,000 – in the second quarter of next year.

Image source, Matthew

BBC Radio 5 Live has been hearing from people around England on the cost-of-living crisis, after Prime Minister Liz Truss gave interviews to BBC local radio stations.

Matthew in Hertfordshire is a social worker and his wife is a teacher. They’re considering getting second jobs to cope with the rising cost of living.

“Last night we were talking about going out and delivering Uber Eats to people just to get some extra money in,” he says.

Matthew expects to have to pay an extra £1,000 a month when he re-fixes his mortgage in June 2023.

“We’re not shy of hard work, we work really hard […] we’re now looking at having to work extra at the weekend to pay for the extra mortgage costs," he says.

“That’s time that we would have spent with the children.”

The value of the pound has been through a number of ups and downs in recent days.

Sterling hit a record low on Monday - after an announcement on Friday from Chancellor Kwasi Kwarteng of $45bn worth of tax cuts, funded by borrowing - as part of a plan to boost economic growth.

Yesterday, the Bank of England stepped in to calm markets.

The Bank said it would start buying government bonds at an urgent pace to help restore orderly market conditions.

Following the announcement, the pound rose 1.4% against the dollar to $1.08 - as you can see from the graph above.

Image source, Reuters

In this morning's round of BBC local radio interviews, Liz Truss faced questions over how safe people's pensions are.

The PM responded by saying the Bank of England was doing "a very good job" of looking after these.

The tax cuts announced in last week's mini-budget shook market confidence in the UK's economy.

Concerns over the level of borrowing needed to fund the cuts led to a significant fall in the value of UK government bonds - an investment which involves the bond-buyer loaning money to the government in return for a rate of interest.

Normally a very stable investment, pension funds have a lot of investments in government bonds (also called gilts in the UK).

However, the fall in their value led to fears the funds would have to begin selling assets - such as bonds and stock markets shares - to pay their creditors.

If that happened, a vicious cycle could be sparked in which the sale of bonds pushed the price further down and triggered more sell-offs.

But the Bank's intervention yesterday - pledging to buy £65bn worth of bonds over the next 13 days - has propped up the price of bonds preventing that cycle kicking off.

Jonathan Josephs
BBC business reporter

Speaking to BBC Radio 4's Today programme this morning, Chief Secretary to the Treasury Chris Philp repeatedly drew comparisons between the Bank of England’s (BoE) intervention and what the Bank of Japan did last Thursday.

However, they were two very different operations.

The BoE launched a £65bn intervention to buy government debt and protect the UK’s “financial stability” and some types of pension funds.

Meanwhile, the Japanese move - which was reportedly worth $21bn (£19bn) - whilst unusual, was more orthodox and was aimed at supporting the value of its currency, the yen, by selling US dollars and buying up yen.

Japan has long-term structural difficulties with its economy which have meant interest rates have been kept low to try to stimulate economic growth.

That in turn has kept the value of the yen low, a problem which has been amplified by the recent increases in US interest rates.

Japanese consumers are unhappy with the low value of the yen as it has fuelled inflation, making the cost of living more expensive.

Another key difference is that the Japanese action did not prompt quite such ferocious market reaction as the BoE’s interjection.

We're continuing to bring you reaction to Liz Truss's interviews with local radio stations this morning - but she wasn't the only government figure on the airwaves.

Chief Secretary to the Treasury Chris Philp told the BBC the government was not planning to bring forward the chancellor's next fiscal statement, which is due in November.

He told BBC Breakfast: "We need to formulate in some detail, the medium term fiscal plan, we're only talking about a few weeks away. It's important to do this in a way that is that is orderly and is well-organised."

Philp defended the spending and tax-cutting measures set out by chancellor Kwasi Kwarteng on Friday, which the PM stood by this morning as well.

"We need to have a growth package which gets our economy moving," said Philp. "I'm not going to apologise for making an intervention in the energy markets that are protecting every single house in this country household in this country," Philp said.

He said the Bank of England's intervention yesterday to buy back £65bn worth of government bonds was "very targeted, specific and time-limited".

He said: "They're independent and it's up to them how they choose to organise that [intervention], and they did a good job."

Vicki Young
Deputy Political Editor

Image source, Getty Images

Plenty of Conservative MPs are unhappy about the mini-budget. The question is what will they do about it?

Several are telling me they want to be constructive and want a lot of focus on trying to bring forward the chancellor’s 23 November statement.

Treasury insiders though say the Office for Budget Responsibility (OBR) needs to know the full picture before doing its forecasts, and there are about seven announcements to come on things like worker visas, planning and childcare reforms which ministers hope will drive growth.

Many believe all of that should have been in place before Friday’s announcement.

Image source, EPA

Labour's shadow chancellor says the current economic situation is "serious", and has again blamed the government's "reckless actions".

In a tweet, Rachel Reeves says: "It is disgraceful that the family finances of people across the country are being put on the line simply so the government can give huge underfunded tax cuts to those earning hundreds of thousands of pounds a year."

Reeves adds that the prime minister's interviews across BBC local radio stations this morning have made the economic situation "even worse".

Liz Truss's "failure to answer questions" about pensions and mortgages "will leave families across the country facing huge worry", she writes.

She says Tory MPs must join Labour in calling for parliament to be recalled "so this kamikaze budget can be reversed" - otherwise they will be "complicit".

There's been some confusion following the prime minister's comments earlier on energy bills.

Liz Truss referred to the £2,500 cap that will be placed on the energy bills of a typical household from 1 October.

This is not a limit on how much you will pay: your bill depends on how much energy you actually use.

The energy price cap sets the the highest amount suppliers are allowed to charge domestic households for every unit of energy they consume.

From 1 October, dual-fuel customers on a standard variable tariff will pay 34p per kWh of electricity and 10.3p per kWh of gas. On this basis, a typical household can expect to pay about £2,500 a year.

However - for one reason or another - more households aren't typical.

Read more here.

Image source, .

Our colleagues at BBC Radio 5 Live have been hearing reaction to Liz Truss’ interviews on local radio from people around England.

Emma in Hertfordshire is close to retirement and says she’s “scared” for her savings.

“I’ve painstakingly saved over 40 years for my retirement,” she says, “so most of that is invested in the stock market.”

“I am scared in the sense that what we saw in the global financial crash in 2008 was how quickly the pack of cards went… you don’t have to use much imagination to see how all our savings could suddenly go.”

Peter in Solihull believes the country needs to give Liz Truss “a chance”.

He accepts that “there are problems” with the government’s current plans, but he thinks “we have to make changes…that’s what we need to do as a country”.

“Is it right? I don’t know. Will it make our country better? I don’t know, but you can’t keep moaning about it because it’s different to how it’s always been,” he says.

Image source, Tina

Tina in Bury volunteers in a food bank. She thinks the government’s fiscal plans are sending the UK “backwards instead of forwards”.

She says they're "making the rich richer and [...] a bigger class divide. I see it every week”.

“We have families who are working three to four jobs and still can’t manage on the money they have coming in."

Roy (not his real name) in Manchester is a financial advisor. He believes “every step [the government] has taken has gone wrong”.

Reflecting on the government’s decision to cap energy bills for a typical household at £2,500, Roy says he thinks there are “other things in a household’s expenditure that will cause people a lot more problems”.

“Look at the banks and building societies, they’ve stopped giving loans and mortgages so the housing market is going to stall.”

Steve in the West Midlands thinks “there hasn’t been any time ”for the government’s plan to have a positive effect".

“I don’t understand what all the furore is about,” he says.

“What wasn’t fair about subsidising everybody's fuel bills? What wasn’t fair about a penny off base rate [tax] or the removal of the national insurance contribution?,” Steve asks.

“We’ve got to give this the chance to fail. We can’t just say, 'it’s not going to work, let’s have a U-turn'.”

Prime Minister Liz Truss spoke to eight BBC local radio stations this morning, defending her mini-budget and saying she was prepared to make "controversial and difficult decisions" to get the economy moving.

Newscast has assembled the full set of interviews, which you can listen to here.

To pay for new tax cuts and schemes to limit energy prices, the government needs to borrow money.

It can do this by selling bonds - which is a promise to pay money in the future.

Most bonds also require the borrower to make regular interest payments until the repayment - hence the appeal to investors.

UK government bonds, known as gilts, are appealing because they are seen as very safe. There is little risk that the money will not be repaid. They're mainly brought by financial institutions such as pension funds.

The Bank of England intervened in the market yesterday after Friday's mini-budget prompted fears of a drop in the value of gilts - posing a risk to pension funds.

Image source, .

From the current governor of the Bank of England to a former governor...

Earlier today we heard from Mark Carney in an interview with BBC Radio 4's Today programme.

Carney also discussed the potential impacts on pension funds of last Friday's mini-budget.

He said the Bank of England "rightly stepped in at the point where the system was about not to function."

The former governor added that pension funds overall in the UK are fine and have enough assets to pay off future pensions, but the problem was there was not enough short-term cash or liquidity to honour some financial contracts. He said this was why the Bank stepped in.

He added that any spending cuts would be a decision for the government, but that the message of financial markets was there was a limit to "unfunded spending and unfunded tax cuts in this environment".

"At some point the higher cost of borrowing undoes the positive impact of any tax cuts and shorter-term growth measures," he said.

The Bank of England announced yesterday it would buy government bonds on a temporary basis to help restore market conditions.

Questioned whether further intervention will be necessary, Governor Andrew Bailey said he could not answer.

Image source, PA Media

We reported earlier that Prime Minister Liz Truss insists fracking is "perfectly safe."

She was speaking to BBC Radio Lancashire, a county which currently has the only fracking operation in the UK, saying she wants the UK to be more self-reliant in terms of energy.

So what does fracking involve?

• Hydraulic fracturing, or fracking, is a technique for recovering gas and oil from shale rock

• It involves drilling into the earth and directing a high-pressure mixture of water, sand and chemicals at a rock layer in order to release the gas inside

Why is fracking controversial?

• The injection of fluid at high pressure into the rock can cause earth tremors - small movements in the earth's surface

The prime minister insists fracking will only go ahead where there "is local community support"

Read more about the technique here.