Savers face another blow to their income after the Bank of England today cut the interest rate to an historic low of 0.5 per cent.

As widely expected, the Bank’s Monetary Policy Committee announced a half point reduction at noon, taking the base rate from one per cent to the lowest it has been since the Bank was founded in 1694.

Investors are already reeling from a massive loss of income on their savings since a series of base rate cuts over the past few months has left interest rates at their lowest point since the Bank was founded in 1694.

Borrowers have enjoyed record falls in the cost of servicing loans, but the full reduction has not been passed on to them by all lenders.

With banks and building societies still reluctant to lend to individuals and businesses, in spite of complaints by business organisations, falling interest rates have done little to stimulate an economywhich remains in the grip of recession.

The Bank has already conceded interest rates alone are not the only weapon at their disposal in trying to stimulate the ailing economy.

The Bank also announced a £75billion package of measures known as quantitative easing, a process that involves printing money and using some of it to buy corporate bonds and gilts.

It is a controversial process because it brings echoes of failing regimes propped up by printing money and triggering spiralling inflation, such as has been seen in Zimbabwe. And there is no certainty that the process will work.