The Bank of England yesterday cut interest rates by 0.25 per cent following concerns over the prospect of global recession.

The drop takes British mortage rates to their lowest in 36 years and may prove a vote winner for Labour. The European Central Bank also made a quarter-point reduction. The ECB decision, the first cut in two years, came as a suprise to investors as Wim Duisenberg, ECB president, had seemed determined to resist a drop.