Bank of England cuts interest rates 100 bps to 2%

The Bank of England slashed interest rates by a full percentage point on Thursday to shore up Britain's crumbling economy and head off the threat of deflation.

The cut took rates to 2.0 percent, their lowest level since 1951. UK interest rates have never gone below this level since the central bank was created in 1694.

Analysts had widely expected the move following business indicators suggesting the economy could be heading for an even deeper recession than most people had predicted.

Amid a global credit crunch banks have clamped down on lending, hitting Britain's highly-indebted economy hard. House prices have fallen 18 percent from last year's peak, unemployment is soaring and consumer confidence has taken a dive.

Britain's economy shrank in the third quarter for the first time since the recession of the early 1990s and analysts expect the pain to intensify into next year.