Jeremy Hunt is a Generation X, so he may remember the early-80s chart hit, “Rip it up and start again”. Last week, he did just that.

In normal times, news that a chancellor had binned his prime minister’s economic plan would have stolen the headlines. But as Harold Wilson once quipped, “A week is a long time in politics”. In the end, it was only three days later that Liz Truss’ premiership was also consigned to (short) history.

Markets reacted positively to news of the prime minister’s resignation. Sterling rallied against the dollar and UK shares moved upwards, while government borrowing costs fell.

“Although the resignation of Liz Truss as Prime Minister leaves the UK without a leader when it faces huge economic, fiscal and financial market challenges, the markets appear to be relieved,” said Paul Dales of Capital Economics. “It was a step that needed to happen for the UK government to move further along the path towards restoring credibility in the eyes of the financial markets.”

“Policymakers globally now feel little shame in mocking the state of affairs in the UK and it is a reminder that credibility and trust take a long time to earn, but can be quickly lost,” said Mark Dowding of BlueBay Asset Management.

Hunt’s move to rip up Truss’ stimulus plan should ease pressure on the Bank of England (BoE) to hike interest rates because it raises the prospect of a deeper recession, which will do some of the central bank’s inflation-fighting for it.

Markets are pricing in a 66% chance that the BoE will raise the base rate by a full percentage point on 3 November, down from a near certainty before the government’s U-turns.

“With the economic outlook now looking materially worse than it did before its last meeting, it is hard to believe the BoE will want to raise rates too aggressively and crush the housing market, unless they are scared that a dovish response could prompt renewed weakness in the pound,“ added Dowding.

Although markets were initially nervous around the Conservative leadership race, by 2pm Monday Rishi Sunak had been confirmed as the next Prime Minister.

It’s not just the government that is capable of U-turns. A survey by market research firm GfK showed that confidence among British consumers remains close to its lowest level since the data began in 1974, with the list of economic headwinds growing as winter nears.

Those recessionary fears were backed up by figures from the Office for National Statistics (ONS) which showed a continuing slide in retail sales. Sales volumes fell by 1.4% from August. The ONS said that people are shopping less than before the pandemic, with falling sales across all areas, most notably food.

In the US, markets surged at the start of the week, boosted by strong quarterly results from banks; no great surprise as their margins increase on rising interest rates. Better-than-expected factory data also contributed to the mood. Expectations that a recession is coming and that the Federal Reserve will continue to raise interest rates appear baked into the market, giving scope for stocks to bounce on good news.

Unemployment data released on Thursday showed that the labour market is still very robust, fuelling expectations that the Federal Reserve will maintain its aggressive stance. But Wall Street closed the week sharply higher after US Treasury Secretary Janet Yellen said that inflation is not becoming embedded in the economy. San Francisco Federal Reserve President Mary Daly also commented that it is time for the Fed to consider slowing the pace of its interest rate hikes.

But the job isn’t done yet. “It’s clear that central banks are willing to sacrifice growth at the altar of quelling inflation. Investors are now moving from denial to acceptance of this,” observed Johanna Kyrklund of Schroders.

So, what about the prospects for equities? “Corporate earnings expectations need to adjust down further,” suggests Kyrklund. “Signs of slowing in either commodity price inflation or wage growth would be encouraging, as they would allow central banks to back off from raising rates. For now, patience is still a virtue.”

Keith Wade, Chief Economist at Schroders, forecasts that US interest rates will reach 4.25% by year-end, but that the slowdown in the labour market may happen quite soon. “The good news is that markets do expect the Fed to succeed in controlling inflation. Long-term inflation expectations are steady at under 3%. This should mean that wage demands begin to moderate as people aren’t expecting a prolonged period of high inflation.”

However well you’ve mapped out your financial future, there’s always the chance that there will be some bumps along the way.

Anything from redundancy to an unexpected tax bill can force you to review your finances and limit your ability to save for the future. It can be a stressful time as financial concerns can have a huge impact on your overall emotional wellbeing.

Lots of people are feeling the pinch right now. Soaring inflation is a challenge for everyone, and even if you’ve always been comfortable, you may now find yourself needing to tighten your belt.

Forgoing luxuries is a no-brainer, but it does take willpower. All too often, people take more drastic steps, cancelling insurance or reducing the amount they’re paying into savings or pensions.

There are often easier and more practical ways to trim your spending without affecting your lifestyle too much in the short term or cutting back in areas that could have serious ramifications further down the line.

The current economic climate is likely to be an even greater concern if you’ve retired or are on the cusp of doing so. You might be wondering whether you can afford to give up work or, if you’ve already retired, you may be worried about how much you can safely draw from your pension.

Taking money out of your pension while markets are falling or increasing your withdrawals could put significant pressure on your pot.

This is why it’s always good to chat to us when your challenges arise, so we can put a plan in place and set your mind at rest.

The same goes for other, less-universal challenges you may face.

For example, you’ll sometimes find yourself in need of a big lump sum. You might be doing building work on your home that’s rumbling on longer than you’d anticipated, or perhaps costs are going through the roof. You might be a business owner and need to find some short-term finance to cover a VAT bill.

If you have a pension and are over 55, you might be tempted to dip into that pot of cash. But taking money out of your pension before you retire could land you with a significant tax bill.

The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.

“I recognise though, given the situation, I cannot deliver the mandate on which I was elected by the Conservative Party.”

Liz Truss resigns as Prime Minister