The pound is closer that at any time in its history to parity with the euro.

Last week saw sterling close at 1.11 to the euro, a fall of 17 per cent since the start of the year.

There are concerns that if the pound slumps still further it could affect the ability of the Bank of England to cut interest rates.

The strength of the pound has been badly hit by fears on the international money markets that the UK economy is at greater risk than many of its major competitors.

Predictions are rife that lack of confidence in the pound could see sterling actually fall below parity with the euro in the coming months.

In a television interview, Yvette Cooper, the chief secretary to the Treasury, said that the government does not intend to intervene to target exchange rates given the failure of previous attempts to do so.

Ms Cooper said: “We have never had a policy of targeting the pound. Our policy has been to target inflation and that, I think, has been the right way. It has paid off over the last 10 or 11 years.”

The minister went on to say, however, that weakness in sterling should help UK exporters by reducing the cost of British goods in the eurozone.

News update from London accountants Carter Backer Winter (CBW)