By Sarah Taaffe-Maguire, business and economics reporter

Bad news has begotten bad news.

After data showed government borrowing in August was the highest in five years, the value of the pound dropped, and government borrowing became yet more expensive.

The pound dropped below $1.35 for the first time in a week, a fall from a high of $1.37 on Wednesday evening. 

It was even worse against the euro, with the value of the pound reaching a more than six-week low and falling below €1.15. 

It means buying things priced in dollars or euros has become more expensive for people who use and are paid in pounds. 

Government spending also became costlier, as the interest rate payable by the government on its benchmark 10-year loans ticked up to the highest level in two weeks, before easing off. 

Long-term government borrowing costs also increased. 

If you've ever wondered just how much your handbag is worth, a contents insurer has got the answer. 

According to Aviva analysis, the average value of a handbag and its contents is now worth a third more than four years ago. 

The typical insurance claim for a handbag is £1,633 this year, a 34% increase compared with an average of £1,217 in 2021. 

Carolyn Scott, head of home and travel underwriting at Aviva, says that the value of your average carryall - including phones, jewellery, sunglasses and beauty products - "can soon add up". 

She also says "the jump in claims costs could also - in part - be explained by a possible increase in people investing in more expensive handbags, which can run into the hundreds or thousands of pounds". 

"While home policies will provide a basic level of cover for handbags as part of your contents in your home, it's worth considering optional personal belongings cover, which will protect your possessions anywhere in the world," she adds. 

"You could also consider taking out accidental damage insurance, which would provide cover for spills and rips that happen in the home." 

If the value doesn't sway you as you consider insurance, maybe a horror story from Aviva will - the insurer says one of the most expensive theft claims it's taken for a handbag totalled more than £20,000.

York has been named Britain's most prosperous city outside London, according to a new report.

The city's job offering and quality of life have blown its competitors out of the water in PwC's new growth report.

A thriving high street, good transport links and better housing were among the factors that put York at the top of the annual leaderboard.

The report ranks British cities based on metrics like house prices, earnings, healthcare facilities, crime rates, and schooling.

Edinburgh and Bristol came second and third in the study, followed by Exeter and Swindon.

Plymouth, Southampton, Reading, Portsmouth and Norwich complete the top 10.

Some of the names in the bottom 10 might surprise you, with Manchester, Liverpool and Birmingham all making an appearance.

See how your city performed below...

Government borrowing was higher than expected at £18bn last month, according to official figures.

The Office for National Statistics said it was the highest August borrowing figure for five years.

Most economists had expected government borrowing to come in at £12.8bn. 

Borrowing for the first five months of the financial year was £83.8bn - £16.2bn higher than the same period a year ago.

The figure will cause a headache for Chancellor Rachel Reeves, who is already expected to announce tax increases at the autumn budget in November to stay on track to meet her fiscal rules and avoid unsettling financial markets.

ONS chief economist Grant Fitzner said: "Although overall tax and National Insurance receipts were noticeably up on last year, these increases were outstripped by higher spending on public services, benefits and debt interest. Total borrowing for the financial year to date was also the highest since 2020."

James Murray, the chief secretary to the Treasury, said the government has a "plan to bring down borrowing" to ensure taxpayer money is spent on the country's priorities. 

"Our focus is on economic stability, fiscal responsibility, ripping up needless red tape, tearing out waste from our public services, driving forward reforms and putting more money in working people's pockets," he said. 

If you're thinking of heading to the pub this weekend, it might be worth popping into your local Young's. 

It's offering customers who use its On Tap app a free pint, glass of wine or diet Coca-Cola until 21 September. 

The drinks included in the offer are: 

• Young's Original
• Asahi Super Dry
• 175ml glass of Morande Coleccion Privada Sauvingnon Blanc
• 175ml glass of Morande Coleccion Privada Merlot
• 16oz Diet Coke
• 16oz Coca-Cola Zero Sugar
• 330ml Coca-Cola 

New and existing app users can claim the deal. 

Add one of the drinks above to your basket in the app, and the treat will be automatically redeemed at the checkout. 

It's worth checking your local Young's pub is taking part in the deal here.

Nationwide is cutting its mortgage rates by up to 0.18 percentage points as of today. 

The country's biggest building society is reducing rates across its two, three and five-year fixed-rate deals for new and existing customers. 

Here are some of the new rates available...

First-time buyers: 

• Three-year fixed rate at 85% LTV with a £999 fee is 4.34% (reduced by 0.15%)
• Two-year fixed rate at 75% LTV with a £999 fee is 4.09% (reduced by 0.10%)
• Three-year fixed rate at 95% LTV with no fee is 5.21% (reduced by 0.18%)
• Two-year fixed rate at 60% LTV with a £1,499 fee is 3.99% (reduced by 0.04%)

Existing and new customers moving home: 

• Two-year fixed rate at 90% LTV with no fee is 4.52% (reduced by 0.16%)
• Two-year fixed rate at 60% LTV with a £1,499 fee is 3.80% (reduced by 0.07%)
• Five-year fixed rate at 95% LTV with a £999 fee is 4.81% (reduced by 0.13%)
• Three-year fixed rate at 80% LTV with a £999 fee is 4.24% (reduced by 0.10%)

"We regularly review our rates because it's important that, as Britain's biggest building society, we maintain a competitive position in the market," said Carlo Pileggi, Nationwide's senior mortgages manager. 

"These latest changes will be particularly good news for those looking to move home, with rates now starting from 3.80%, and for first-time buyers as we make a wide range of cuts across those product ranges." 

Every Friday, we take an overview of the mortgage market with industry experts and round up the best rates with Moneyfactscompare.co.uk. 

Borrowers may be wondering whether the Bank of England will cut the base rate again this year after Thursday's decision to hold it at 4%.

Two members of the Monetary Policy Committee wanted a 0.25 point reduction, but the majority were set against it.

On the upside, the average two-year fixed rate at the beginning of this month was at its lowest level since September 2022, according to L&C Mortgages' tracker.

But borrowers can't afford to sit back when there's still a chance of rates edging higher, L&C's associate director David Hollingworth said.

The average two and five-year fixed rates stand at 4.98% and 5.02% respectively, unchanged from a week ago.

Lenders increasing rates included TSB, by up to 0.15%, and First Direct, by up to 0.20%. 

In contrast, Barclays cut fixed rates by up to 0.44%.

Rachel Springall, finance expert at Moneyfacts, said: "Uncertainties surrounding the outlook for interest rate moves have been evident in recent weeks, with volatile swap rates leading to a more cautious approach from lenders to make any significant changes. 

"Not only this, but many will be waiting with bated breath for the budget. 

"This waiting game, alongside forecasts for inflation to remain above target, makes it less likely for the Bank of England to make further rate cuts this year."

She said more affordable housing is needed, as buyers who can only borrow at higher loan-to-values run the risk of falling into negative equity if house prices plummet. 

"It's worthwhile trying to overpay each month to reduce the overall mortgage term."

Remortgage customers may be looking to save on the upfront cost of any deal and might also want a deal to cover a valuation or legal fees.

A Best Buy mortgage could be the most cost-effective choice in this instance - check out the options from Moneyfacts below...

Listen up Kat, Katherine, Sue, Suzy and those of you with a similar name - you can get a free katsu meal at Banana Tree next week. 

The restaurant chain is offering the free dish, worth up to £16.75, to anyone with a name close to Kat and Sue to celebrate national katsu curry day. 

You can claim the deal from Monday to Thursday next week from 4pm each day. 

You need to sign up for the free Big Flavour Club loyalty membership scheme and show your ID to your server to get the offer. 

You can choose from three dishes: 

• Katsu curry (£16.45)
• Katsu burger (£16.75) 
• Katsu carbonara (16.75)