The Monetary Policy Committee has cut the UK base rate to 2% from 3%, a further 1% cut on top of last month’s 1.5%.

The base rate was at 2% for most of the 1930s and 1940s and was last at 2% in 1951. The base rate has not been below 2% since the Bank of England was founded in 1694.

Reacting to the cut, Neil Chegwidden, Head of Residential Research at Jones Lang LaSalle said: 'Quite bizarrely, given the 1.5% base rate cut last month and the various giveaways in last week’s Pre-Budget Report, today’s base rate cut will still be seen as a much needed boost and comfort to Britain’s beleaguered households and homeowners.“

'The rate cut will also be welcomed by the housing industry and will provide yet greater incentive for first-time buyers to step onto the property ladder. The Bank of England’s latest move will not solve all our housing woes but it does sow the seed of hope, especially looking towards next year. The magnitude of the cut is an additional boost for the housing market.'

RICS chief economist Simon Rubinsohn said: 'Households and business will take some comfort from today's bold move by the BoE, which is a much needed response to the dramatically worsening conditions across the whole economy. However in our opinion it will not on its own be sufficient to bolster confidence given the scale of the current financial crisis.

'Further significant job losses will be announced in the run up to Christmas and into the first half of 2009, putting pressure on the Bank to cut rates further. We expect rates to fall to 1% by the end of Q1 2009.'