Interest rates were cut to their lowest level in 53 years on Thursday with clear indications of more cuts to come, as the International Monetary Fund forecast that the British economy would suffer a downturn next year on a par with the early 1990s recession.

The Bank of England surprised everyone by cutting its official rate by 1.5 percentage points to 3 per cent; a cut three times larger than any seen since the Bank’s monetary policy committee was established in 1997.