For the first time, British holidaymakers are receiving less than €1 for £1 when they buy foreign currency at some airports.

At Birmingham International and Liverpool airports yesterday, passengers were receiving €199 when handing over £200 at Travelex kiosks. The plunging pound, wide retail margins and a flat-rate commission have tipped the exchange rate to worse than parity for the first time since the creation of the euro in 1999. Although Travelex was offering €1.0189 to the pound, the effective rate dropped after taking account of the £4.50 commission on every trade.

The slump to below parity may come as a shock to business people and holidaymakers travelling to the eurozone. Only a few months ago, travellers could be confident of getting at least €1.15 or €1.20 for each pound.

The pound has been plunging in recent weeks against many foreign currencies because of concern about the depth of the economic downturn in Britain and worries about government borrowing. Thousands of private investors in Britain are joining institutional investors in betting that sterling has further to fall. Spread-betting companies are reporting a surge in the practice as clients, now banned from taking down bets on banks, switch their attention to the currency.

“Private investors normally favour company shares for short-selling but now this has massively shifted into sterling,” said Andy Yates, director of the Digital Look website, which offers a betting facility run by CMC Markets. Of all short positions taken by customers, 72.5 per cent were betting on a further slide in the pound last month.

On the wholesale markets yesterday, the pound sank to a new record low of €1.1225 on the back of dismal figures from the manufacturing sector. A lack of demand among consumers in Europe and the US dragged export orders to a five-year low, a survey from the CBI showed.

A spokeswoman for Travelex said that high rents and the cost of staffing had led to poorer terms at Birmingham and Liverpool. There were better deals at most of its other UK shops.

Explore Economics

• Pre-Budget Report 2009

• Budget 2009

• World Economic Forum

• The Times MPC

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive