The committe had discussed taking the figure to as low as 0.5% according to reports, but even at 1% the rate signals a downturn in its view of the economy.

The cut, which sets interest rates at the lowest in the Bank's 315-year history, is aimed at boosting lending to both business and consumers by decreasing the cost of borrowing.

However, the Federation for Small Businesses had urged the Bank to hold back on further cuts, as a recent poll had shown the majority of respondents did not support it, as it was not solving the problem of accessing finance.

John Wright, FSB National Chairman, said: "Small businesses are clearly worried that this monetary policy has been used extensively over the last few months yet they are still struggling to access cheaper finance.

"The concern now is that if rates are cut any further there may not be too much more room for manoeuvre in the economy. The onus is really on the banks to start promoting these lower rates to fire up the economy." 

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