The value of the pound fell to less than one euro today at bureaux de change, leaving holidaymakers heading to Europe with rocketing bills for their vacation.
In some airports, Britons planning a half-term break face the prospect of getting just 98 cents for their pound before commission, after sterling sank to a five-month low against the euro.
The pound traded as low as €1.1013 on foreign exchange markets today, down from €1.14 at the start of the month.
It also reached a three-week low against the dollar yesterday - down to $1.6169 - although it mounted a recovery today, back to $1.63.
The currency slump will leave hard-up families, already struggling to cope with the recession, paying 15 per cent more for European holidays than last year.
Since the credit crisis began in the summer of 2007, the pound has slumped more than 25% against the euro, from €1.47.
Currency broker Caxton FX said parity between sterling and euro was on the cards. 'The UK is so led by the financial sector that any negative news means the pound plummets,' said analyst Duncan Higgins. 'Investors have lost confidence in the UK economy and seen the fragility of the banking sector underlined.'
The growing trend for international investors to shun sterling-based assets is a reflection of the more desperate measures being undertaken by the UK authorities to tackle the recession, such as the Bank of England's $175bn programme of quantitative easing - a modern-day form of money printing.
By Rupert Steiner
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