Gordon Brown, UK prime minister, holidayed in the UK. Who can blame him? Going abroad has become expensive for British people. The decline in sterling, which began last year, is now turning into something of a rout.

The UK is exposed in three ways to the aftermath of the credit squeeze. It has heavily overvalued housing, the most indebted consumers in the world and an economy that is peculiarly reliant on financial services. High borrowing costs, a painful housing market correction and losses in the financial sector mean most of the UK’s assets have been dramatically revalued down. Sterling has suffered.