Northampton: 'We should have put interest rates up sooner'

Government borrowing hit £11.8bn in August as interest payments surged higher due to soaring inflation

The fall in the value of the pound has fuelled suggestions of more interest rate hikes, with the Bank of England saying it would "not hesitate" to raise rates to keep inflation under control.

Chancellor Kwasi Kwarteng's comments about more tax cuts, funded by borrowing, spooked the markets, leading to the pound devaluing as investors became doubtful about the UK's ability to meet this larger debt.

So how are people reacting to these sudden economic changes of a low value pound, higher interest rates and rising inflation?

'Everything costs more'

Hayley from Northampton is unsure about her economic future

Hayley, a Northampton mother-of-two in her forties, works for a large company as a kitchen designer.

"It's bad because in the sense everything costs more at the moment, it's also the tax they put on," she says.

"Everything's going to cost more, we're going receive less money, and I don't know what the future is going to hold, really.

"We've already seen the impact in the last six months and I can only imagine it's going to get worse."

A low pound means it will cost more to import commodities - including oil and gas - that are priced in dollars.

In terms of the forthcoming winter and the increase in energy prices, Hayley says she's slightly worried but will be keeping her heating on.

"I've got young children, I'm just going to go with it and see what happens," she says.

Looking ahead to Christmas, Hayley said she couldn't predict how different it will be this year.

She adds: "We will have to play it by ear I think, and see what happens, hopefully not."

'There's nothing we can do'

Bob Beezhold says he is possibly less worried than others about the economic situation

But Bob Beezhold, a 71-year-old retired lorry driver from Northampton, says he is "not too worried" about the pound falling against the dollar and thinks there is simply "nothing we can do" about it.

He says: "It's down at the moment, but it could also come up again. I have got a holiday booked for Christmas, but I was lucky I got my euros way in advance when it was up."

Mr Beezhold does not think the situation is too serious, as "nobody's quite got the bigger bills coming through yet, but it's going to be [more of an issue] half-way through the winter, when they do start coming in".

He adds: "Financially, I haven't got a problem."

But he admits if he was just having to survive on a state pension he would be concerned.

'We're paying the cost'

Paul Strausa is being more careful with his electricity usage

Paul Strausa, 60, a retired entrepreneur from Northampton, says: "Imports will get more expensive so we'll suffer in that respect."

Mr Strausa believes that years of low interest rates have had an impact.

"We should have been putting them up and now we're paying the cost," he says.

"America put their interest rates up, so the dollar's strong. We put ours up half a per cent the other day, it's nowhere near enough," he says.

He says he's trying to make changes and save money.

"I am actively trying to tell people to put lights off, don't use the dryer, wait for a drying day, that's a good idea. Always use the washing machine with a full load and that's a great way of saving money," he says.

"I reckon with a few sensible things, you can probably save 25% on your energy bills."

The Treasury says it will set out how it intends to fulfil its commitment to cut taxes, in a medium-term fiscal plan on 23 November.

It will include a Office for Budgetary Responsibility (OBR) forecast on how well or otherwise the UK economy is expected to perform.

Meanwhile several mortgage lenders, including Virgin Money and the Skipton Building Society, have withdrawn their mortgage offers while new ones are created, for fear of continuing interest rate rises.