The Bank of England has the interest rate to 1.5 per cent. After major speculation, and belief that the central bank would drop the interest rate, the cost of borrowing was dropped to the lowest level in its 315 year history, by the nine members of the Monetary Policy Committee (MPC).

This follows an aggressive rate cutting policy by the MPC, which has brought the rate down by three percent since early October, last year.

Counterparts to the Bank of England, including the Federal Reserve and the European Central Bank, have already effectively slashed rates to zero and 2.75 per cent, respectively.

A cut in the interest rate, could provide the needed boost to the economy, in the light of the recession. If banks and loan providers decide to pass on the cut, loan customers could benefit from lower repayment costs.

Stephen Lewis at Monument Securities, said: "[The Bank] may conclude that if the market is looking for a 50 basis points Bank rate cut in January, it would be safe to deliver easing on that scale."

Meanwhile David Kern, economic adviser to the British Chambers of Commerce, said: "The rapid worsening in the economic situation and growing fears over rising unemployment reinforce the need for the MPC to continue with aggressive interest-rate cuts."