Base rate: how low can you go?

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Last Modified: 08 Jan 2009
By: Siobhan Kennedy

Today's 0.5 per cent cut by the Bank of England puts interest rates at their lowest since 1694 - the year Newton discovered gravity.

And the reduction indicates the gravity of today's crisis, amid signs that the government will have to find other ways to reignite bank lending and stave off the worst recession in modern history.

The widely expected base rate cut puts the country in uncharted territory. But business leaders have insisted that, regardless of the cut, it is the availability of credit that remains the vital factor in the face of deepening recession.

And their fears were underlined today by the announcement by car maker Nissan that its Sunderland car plant - the biggest and most productive in the country - is to see 1,200 jobs cut, almost one in four of the workforce there.