BoE slashes rates to record low one per cent

The Bank of England slashed interest rates to a record low yesterday to help Britain out of recession, while dire German industry orders and Spanish industrial output confirmed European businesses were struggling.

The British central bank cut its base rate by 50 basis points to one per cent, the lowest since its creation in 1694 and the latest in a series of aggressive cuts designed to stimulate the flagging economy.

"The global economy is in the throes of a severe and synchronised downturn," the bank said in a statement accompanying the decision.

Policymakers have cut interest rates sharply in an effort to stimulate demand and get credit flowing again after a financial crisis that began with a collapse in risky US home loans, has devastated the banking sector and pushed the US, the eurozone, Britain and Japan into recession.

The International Monetary Fund says Britain's economy, heavily dependent on the ravaged financial sector, could be the worst-hit in the industrialised world, shrinking by 2.8 per cent this year.

The outlook for the eurozone's second biggest economy remained "extremely subdued" the Economy Ministry said.

Global uncertainty prompted consumer goods giant Unilever to abandon all its targets, despite a forecast-beating 7.3 per cent rise in the fourt quarter underlying sales.