The Bank of England will lose its independence to set monetary policy if interest rates fall close to zero, Alistair Darling made clear on Tuesday, saying the Bank and the Treasury would have to work “hand in hand” in those circumstances.

With interest rates likely to fall on Thursday to their lowest level since the Bank was founded in 1694, the chancellor insisted that should the Bank need to operate monetary policy by printing money to buy assets, the Treasury would be intimately involved.