Banks ordered to pass on rate cuts

The Bank of England slashed interest rates by 1.5 percentage points to 3 per cent yesterday, their lowest level in more than 50 years, as the International Monetary Fund forecast that the UK would be the world’s worst-performing major advanced economy next year. Britain’s economy will shrink by 1.3 per cent in 2009, the IMF said, the first full year of decline since 1991. Ministers have claimed the UK is the best-placed among the developed economies to withstand the rigours of recession, a stance clearly now contradicted by the IMF. The IMF also warned that the advanced nations as a group would suffer recession next year, something not witnessed since the Second World War.