Sterling had already fallen around 0.5% - going from $1.193 to $1.1850 - by the time the chancellor rose to his feet in the Commons.

But after he finished, it continued to fall, down 1% at $1.178 just before 2pm.

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The FTSE 100 was down around 0.7%, while the more domestically-focused FTSE 250 was down 0.35%.

Marcus Brookes, chief investment officer at Quilter Investors in London, said: "Today's autumn statement has painted a bleak picture for the UK.

"Markets originally reacted well to the steady hand of Jeremy Hunt.

"They will continue to give him the benefit of the doubt and see the impact of this plan, however, there is also a chance that they see this as an overcorrection and that the measures could stifle what economic growth was present."

Shares in Shell and BP were both down, albeit marginally, after Mr Hunt confirmed that the energy profits levy - or windfall tax - would be increased from 25% to 35% from next year.

The announcement was not a big surprise, which is one reason why share prices did not react as badly as they might otherwise have been expected to.

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Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: "The door was inched open even further on the case for a windfall tax following comments made by Shell's outgoing boss, Ben Van Beurden, that the tax burden had to fall on the energy sector to help the poorest in society.

"That's partly why the reaction has been relatively muted in terms of their share prices."

The windfall tax will also be extended to electricity generators but shares in many of these companies were up, reflecting again that - with a number of reports predicting the move - it was mostly priced in to markets.

The economy is widely predicted to shrink next year - the Bank of England has forecast a two-year recession, and Mr Hunt confirmed that a contraction is expected.

But he said the UK would bring down its government debt as a percentage of GDP within five years under his plans.

Government bonds edged lower, while bond yields - which were already up before Mr Hunt's statement - rose further.

The losses were modest, however, compared to the sharp sell-off sparked by the short-lived "mini-budget" announced by previous prime minister Liz Truss and her chancellor Kwasi Kwarteng in September.

The benchmark 10-year gilt yield was up seven basis points to 3.21%, while the two-year yield rose 12 basis points to 3.104% having traded at around 3.07% just before Mr Hunt started speaking.