City experts were hoping a radical 1.5% cut from the current 3% rate will be enough to kick-start spending on the high street, and prevent a slide into a depression.
Accountancy firm PricewaterhouseCoopers today warned Britain will be the worst performing major world economy next year, and called for urgent action this morning from the Bank.
Hetal Mehta, senior economic advisor to the Ernst & Young Item Club, said: ‘This is a grim set of data. With the services sector shrinking at a record pace and employment falling sharply, it is clear this recession is gathering momentum.’
Figures from the high street show inflation is in rapid retreat as retailers slash prices to boost sales in the run-up to Christmas. The British Retail Consortium said shop prices last month were only 2.7% higher than a year ago, down from 3% in October, and a peak of 3.8% in August.