STERLING yesterday sank to its lowest level against a basket of currencies since the depths of the global financial crisis, as fears of “hard Brexit” weighed, and one senior Scottish economist warned the UK outlook appeared “bleak”.

Jeremy Peat, visiting professor at the University of Strathclyde’s International Public Policy Institute, cited the seeming willingness of Conservative politicians to forego access to the European single market as they focused on immigration, as he highlighted the difficulties facing the UK.

And he warned that, while there might be a short-term boost to exports from a weak pound, a “severe devaluation” of sterling was not a solution to the UK’s problems on the Brexit front.

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David Bell, professor of economics at the University of Stirling, warned the pound’s tumble “makes us all poorer”.

The pound was at 5pm trading below $1.24, at around $1.2395, having weakened further from Friday’s close of $1.2414. It sustained heavy losses on Friday, finishing nearly two-and-a-half cents lower on the day even after the bulk of a “flash crash” in Asian trading was unwound. Sterling hit 31-year lows against the dollar during every session between last Tuesday and Friday, with fears of hard Brexit fuelled by the tone of last week’s Conservative Party conference.

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John McLaren, honorary professor at the University of Glasgow’s Adam Smith Business School, said yesterday of sterling’s weakness on Friday: “The interesting thing was it didn’t go back up to the same level it was [at before the flash crash].”

Mr McLaren, who writes for the Scottish Trends economic website, added: “Does that tell you all it takes is some piece of bad news and it [sterling] is so weak now that it has further to fall? Would it take an awful lot to keep on edging it lower?”

He also highlighted the high degree of uncertainty in financial markets over what would happen in terms of Brexit.

Sterling also lost further ground against the euro yesterday, with the single currency trading above 90p. At 5pm in London, the euro was trading at around 90.09p, up more than 0.2p on its close on Friday. The euro jumped by 1.66p on Friday.

The sterling trade-weighted index, which measures the pound’s value against a basket of currencies, fell as low as 74.2 during yesterday’s session, its worst level since January 2009 in the depths of the financial crisis. It finished at 74.3, down 0.4 on the day.

Mr Peat said: “It is little wonder that sterling continues to fall when UK politicians are making it ever clearer that they are prepared to forego access to the single market in favour of a severe reduction in immigration. Lower sterling may provide some succour to exporters in the short term, but at the same time inflation will rise and disposable incomes will be adversely affected.”

He added: “Taking these impacts alongside the adverse shock to our economy anticipated when the UK undergoes a sharp exit, the economic outlook is bleak - and the scope for monetary and fiscal stimulus while retaining policy credibility is limited. A severe devaluation of sterling is not a solution to these anticipated ills.”

Commenting on the pound’s weakness, Mr Bell said: “The drivers certainly seem to be the reaction of the markets to the various things that have been said in the last few days around the nature of Brexit and, in particular, the likelihood that UK trade with the EU will be more costly than it has been.”

He added: “The cut in the value of sterling may actually offset these increased costs so we will continue to be able to export on reasonable terms to the rest of the EU. Of course, the reduction in the value of the pound makes us all poorer and that is the bottom line. That has been the effect of the revelations over the last few days and we will see that coming through over the next few months in higher prices.

“There will be increases in fuel prices, energy prices, food prices and so on. That is the way we will find we are poorer.”

The “flash crash” on Friday morning sent the pound plummeting briefly below $1.15 during Asian trading hours.

The pound dropped from around $1.26 to $1.1378 in a matter of minutes. The fresh 31-year low was later revised to $1.1491 by Thomson Reuters, which owns the Reuters foreign exchange brokerage platform RTSL. It said an outlying trade had been cancelled. Bloomberg data put the low at $1.1841.

There were suggestions sterling may have been hit hard early on Friday morning by French President Francois Hollande demanding tough Brexit negotiations.