By The Economic Times editor: Britain’s currency – Sterling, has just recorded its steepest monthly decline against the US dollar since the result of the Brexit referendum when the Pound crashed 13 per cent overnight – and then fell another 6 per cent over the following six months. For Sterling – Brexit has been a disaster. It also means that for everything the UK imports – prices go up as the currency weakens.

Against a current backdrop of ever-intensifying economic and political uncertainty, the pound fell another 4.5 per cent in August to $1.16 in the biggest monthly drop since October 2016. Overnight, Sterling fell further to $1.15.

Sterling also fell by almost 3 per cent against the Euro – even when the Euro fell back against the USD to its worst position since the 2008 financial meltdown.

Investors are increasingly betting against the UK’s prospects. The currency’s continued fall reflects not just the deteriorating outlook for Britain’s economy as the energy crisis deals a powerful blow to businesses and consumers but how investors view their own prospects in this deteriorating environment.

The new prime minister, likely to be Liz Truss, will bring yet more uncertainty as they set out their new fiscal priorities. “Cyclical crosswinds are likely to intensify for the pound into the autumn as the UK economy navigates new fiscal initiatives against still-rising energy costs and consumer price index,” JPMorgan analysts said earlier this month.

Liz Truss, the current frontrunner set to be crowned the fourth Tory PM in the last six years, has promised £30bn in tax cuts as part of a plan to support the UK economy against the worsening cost of living crisis.

There is no doubt that a targeted loosening of fiscal policy could alleviate some of the pain of the approaching recession that is forecast by the Bank of England. However, it is true to say that many economists and analysts have already commented that a stimulus of this nature will likely make it more difficult for the BoE to fight the worst effects of new inflationary pressures in more than four decades.

Writing in the FT, David Blanchflower, Lord Sikka and Richard Murphy (Prof. of Economics, Prof of Accounting and Prof of Accounting Practice respectively) highlight that “the likelihood of a recession on the scale of the 1930s is very high.” Collectively, they have warned of drastically “rising company failures, mortgage repossessions and tenant evictions and that public services in education, health and care will be drastically impaired.”

Like them, The Economic Times takes the view that there is a way to save the economy from its impending meltdown. The Bank of England could use similar tactics for this emergency as it did for the meltdown caused by the banks in 2008.