The Bank of England has cut UK interests rates from 0.5% to 0.25%, a record low since 2009.
The move comes in the wake of news that the UK economy is contracting at the fastest rate since the financial crisis.
The Monetary Policy Committee voted unanimously to cut Bank Rate alongside a package of measures designed to provide additional support to growth and to achieve a sustainable return of inflation to the target of 2%.
The announcement caused the pound to slide a further 1% against the dollar to $1.32.
Yesterday, the Markit/CIPS purchasing managers’ index showed a fall from 52.3 in June to 47.4 in July, indicating contraction in the UK’s dominant services sector.
The decline of the services sector follows a similar pattern to a contraction in both construction and manufacturing in July in the wake of the Brexit vote on 23 June.
The interest rate cut by the Bank of England was widely expected in response to the poor figures being reported across most sectors.
Inflation, as measured by the Consumer Prices Index (CPI), is projected to climb to almost 2.5% in three years, well above the 2% targeted by the Monetary Policy Committee.