Interest rates cut to all-time low

The Bank of England has cut interest rates by a further 0.5% to 1.5% — the lowest in its 315-year history.

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

"The Bank of England is doing its bit to give some much needed stimulus to the economy with this historic move, however it is now imperative that the banks finally take some action in passing this latest cut on to companies to help them cope with what is expected to be a tough first half of the year," said Christie + Co director Jeremy Hill.

One banking source added: "Pressure now lies with the banks to pass the cut on — not only on existing variable rate and tracker mortgages but also on to new mortgage deals."

The Federation of Small Businesses (FSB) welcomed the historic cut but warned the real concern was not the cost of finance but access to it.

"With rates now at their lowest ever level, small businesses are more concerned about access to money," said FSB national chairman John Wright.

"The FSB would like a cast-iron guarantee that the banks will not only pass on the interest rate cuts, but pass on the money to the small businesses that need it.

"The small business sector is the sector to see the UK out of recession in 2009 and into economic recovery, but this can only work if credit lines start flowing to viable businesses again."