The Bank of England has slashed interest rates by half a percentage point from 5% to 4.5% to ease financial pressures on the UK’s economy.

The decision to cut rates by 10% was not expected until tomorrow.

Sue Robinson, director of the Retail Motor Industry Federation (RMIF), representing the UK’s retail motor sector, said: "The Bank of England’s decision to cut the interest rate is positive news for the economy, and will hopefully help rebuild consumer confidence.

"Consumers desperately needed this long-awaited move, along with other bank support measures put in place by Government this morning. All these moves should help to instill consumer confidence and will also help businesses at this difficult time."

The US Federal Reserve has also cut rates from 2% to 1.5%, while the European Central Bank trimmed its rate from 4.25% to 3.75%.