The Bank of England’s Monetary Policy Committee has slashed the base rate to boost the UK’s flagging economy.

The Bank of England’s Monetary Policy Committee (MPC) has cut the base rate by 1.5 per cent.

The surprise cut from 4.5 per cent to three per cent comes as the country begins to face up to the possibility of a deep recession.

David Kern, adviser at the British Chambers of Commerce, says, ‘We support the MPC’s decision to cut rates by more than analysts expected. But we believe the MPC should move much more steadily and deliberately and avoid too many lurches towards emergency measures.’

The base rate has not been cut by more than half a percentage point since January 1993, when it was reduced from 6.88 to 5.88 per cent to assist the UK’s recovery from the country’s last full-blown recession.

Kern adds, ‘Emergency measures have the undesirable effect of unsettling the markets and undermine confidence. Using up all their bullets prematurely will leave the MPC with little scope to inject confidence through continued rate cuts when the recession deepens.’