Interest rates cuts to 5.25%

The Bank of England has cut interest rates to 5.25% in an attempt to stave off the threat of recession.

The move, which had been widely expected by analysts, means the Bank has now reduced rates twice in three months in a bid to revive consumer spending and boost the ailing housing market.

More rate cuts are expected later in the year but may be thwarted by the spectre of rising inflation.

Inflation remained at 2.1% in January but five major energy companies have since introduced hefty price rises for gas and electricity. 

German-owned utility firm E.On, formerly known in the UK as Powergen, became the latest company to announce prices increases, raising gas prices by 15% and electricity by 9.7%.