With UK interest rates at 1.5 per cent, they have not been lower since the Bank was founded in 1694. But many economists still fear the Bank has not done enough and will be forced to follow the Federal Reserve into unorthodox measures later this year.

“2009 is also likely to witness radical monetary policy developments,” said Ross Walker of the Royal Bank of Scotland, who shares the view of Alistair Darling, the chancellor, that the recession is likely to be longer and deeper than expected.

In a statement explaining the widely expected move, the Bank's Monetary Policy Committee said the pace of contraction in economic activity had increased during the fourth quarter of 2008, and that output was likely to continue to fall sharply during the first part of this year.