Interest rates cut by 1.5%

The Bank of England has cut interest rates by 1.5% to 3% — its lowest since 1955.

The dramatic move is designed to spark growth in the economy and will benefit homeowners and borrowers but will only have an effect if the banks pass on the rate cut.

It is the biggest rate cut since 1981 when it was reduced by 2% and follows last month's 0.5% emergency cut.

The upshot could be customers with more money in their pockets and licensees with more money to invest in their business.

One banking source said: "This move is twofold — primarily it is aimed at easing the strain on the wholesale money markets and secondly at stimulating life into a mortgage market that has seen the number of available loans drying up and the cost of those loans rising.

"The rate cut will hopefully go some way towards reversing the decline in household spending by reducing the cost of mortgages and other borrowing, thereby freeing up cash for other means.

"That is assuming the banks pass on the rate cut but these things are not as straight forward as they used to be."

One business transfer agent, Graham Allman of GA-Select, said: "This is brilliant news. It is just the shot in the arm we needed. The Bank of England has finally listened to the people."

Jeremy Hill, director at Christie + Co said: "Christie + Co welcomes this bold move by the Government, one which we hope will filter through to the lending markets and lead to renewed confidence in the hospitality sector where the demand for high quality, well located property is still strong."