Interest rate cuts have not yet had chance to spread the benefits to the wider economy, it is claimed.

Trevor Williams, economist Lloyds TSB, says mortgage rates and payments are lower, although the effects are yet to be seen for the wider economy.

"It usually takes anything up to 18 months or two years for the rate cut to affect the economy so it is difficult to see all the effects of the rate cuts so far," he continues.

Furthermore, Mr Williams believes the weakening economy has not yet had a "discernible effect" on the country’s finances as a whole, although interest debts and the cost of borrowing have been reduced.

On February 5th, the Bank of England Monetary Policy Committee voted to reduce the bank rate by 0.5 percentage points to one per cent, with the constrained supply of credit cited as one of the reasons behind the decision.

It also noted a decline in output and weak consumer spending, with the consumer price index falling to 3.1 per cent in December. The next interest rate decision is expected on March 5th.