Why has the pound fallen on Truss’s arrival?

The pound fell as low as $1.14 today, a low price not seen for any great period since the 1980s.

Quite apart from this unfortunate symbolism for a new PM, it presents a problem for Liz Truss - because it will mean further rises in the sterling price of imports, and yet more inflation.

So Truss and her soon-to-be-confirmed chancellor Kwasi Kwarteng are taking a risk with the "fiscal loosening" he promises, his perhaps $100bn of new government borrowing to put a cap on energy prices and ease the hardship for poorer households and small businesses.

He hopes that he will stimulate an economic recovery and that would reassure investors in sterling and sterling assets.

But if investors continue to focus on the UK's anaemic growth, low investment and bulging current account deficit, and if they fear that Kwarteng's stimulus will fuel inflation more than it stimulates growth, then the real inflation-adjusted return on UK assets will be seen to fall even more, and sterling will weaken more - and sterling could fall even if the Bank of England raises interest rates more than it would otherwise have done.

There is no easy fix to the UK's toxic mix of recession and inflation. Which is why the quantum and method of alleviating the cost-of-living crisis, promised for Thursday, will determine not only whether millions of households can heat and eat this winter, but whether Truss and Kwarteng begin their new lives running the UK as heroes or zeros.

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