Interest rates cut to lowest level since 1951

The Bank of England has cut interest rates by 3% to 2% today, which is the lowest level since 1951.

A cut was widely expected by economists and has been welcomed by many commentators who believe the reduction will help the deteriorating economy.

The reduction follows last month’s shock reduction of 1.5% and a cut of 0.5% the previous month.

The aggressive rate cuts of late are hoped to stave off a severe and prolonged recession.

There has been evidence this week of a severe downturn after figures revealed yesterday showed that the UK services sector, which is the backbone of the economy, is declining at a record rate.

The closely monitored Purchasing Managers’ Index (PMI) fell to 40.1 in November from 42.4 in October, the lowest level and fastest decline since the survey started in 1996.

Furthermore, figures from the Society of Motor Manufacturers and Traders (SMMT) today show that the economic downturn continues to have a major impact on new car sales.

In the meantime, Halifax has announced today that house prices continue to fall with a decline of 2.6% noted in November. This represented the sharpest monthly fall since housing market crash of the 1990s.

In related news, the European Central Bank is set to announce its decision on interest rates today as figures confirm that the euro zone is in its first recession. A cut from 3.25% to 2.75% is widely expected.

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