Britain's interest rates were cut to a 37-year low yesterday as the Bank of England followed its international counterparts in attempting to stave off the growing threat of a global recession.

Whilst the 0.25 per cent cut was less than that seen in the eurozone and the US it was reflective of growing unease about the future prospects for the economy. The cut was decided at the first ever unscheduled meeting of the monetary policy committee.

The move came as figures revealed yesterday that inflation had breached the government's 2.5 per cent target for the first time in over two years.