The dramatic fall in value of the pound could cause a rise in the price of a pint of beer, an industry boss has warned.
The pound plunged to its lowest ever level against the US dollar on Monday morning, the latest blow to UK consumers caught in the middle of a cost of living crisis.
Sterling fell by more than 4% to just 1.03 dollars in early Asian trading, although it later regained some ground to 1.07 dollars, just days after chancellor Kwasi Kwarteng announced a raft of tax cuts.
It was the pound's lowest level against the dollar since decimalisation in 1971. The euro also hit a fresh 20-year low against the dollar.
Watch: Pound falls to all-time low against US dollar
Confidence in the pound is at all-time low following last week's government mini-budget, which unveiled the biggest tax cuts in 50 years.
Financial experts have warned that the pound's drop towards parity with the dollar will send the cost of goods soaring even higher, and that includes beer.
Paul Davies, chief executive officer at Carlsberg Marston’s Brewing Company, suggested the fall of the pound may cause a rise in beer prices.
He told BBC Radio 4’s Today programme that the drop was “worrying” for the British beer industry, which imports beer and hops from overseas.
Asked if the value of the pound mattered, he said: “Yes it does, many of the hops used in this country are actually imported and a lot of them, particularly for craft brewers, are imported from the States, so changes in currency is actually worrying for industry.
"And then, of course, people drink a lot of imported beers from Europe, and the euro versus the pound is also something we’re watching very closely at the moment.
“Of course things will rise. As an industry we’re generally using British barley and we’re using a lot of British hops, but of course if you’re drinking double IPA that requires a lot of Citra hop and other hops from the States, and at some point that is going to have to be passed through to both the customer and the consumer if prices are this volatile.”
Kwarteng and prime minister Liz Truss have been accused by the Labour Party of gambling with the UK's finances.
Shadow chancellor Rachel Reeves told Times Radio: “They’re not gambling with their own money, they’re gambling with all our money, and it’s reckless and it’s irresponsible as well as being grossly unfair.”
Kwarteng has previously brushed off questions about the markets’ reaction to his mini-budget after it was announced on Friday using more than £70 billion of increased borrowing.
On Sunday, he claimed the cuts “favour people right across the income scale” amid accusations they mainly help the rich.
But financial markets continue to be anxious and there are fears the Bank of England may even be forced to step in with an emergency interest rate hike in a bid to steady the pound and rein in inflation fuelled by the tax cuts.
The Bank increased rates by another half percentage point to 2.25% last Thursday, but financial markets are speculating that it may act with another before its next scheduled meeting in November, which would also impact household mortgage borrowing.
Watch: Labour says chancellor must have plan to reverse fall of the pound