Industry and unions have welcomed Thursday's decision by the Bank of England to cut interest rates.

The CBI praised the committee of "wise men" for acting to soften the business impact of a slowdown in the US economy.

Director-general, Digby Jones, said: "We do not expect the UK to go into recession, but it is clear there are stormy waters ahead. Both manufacturing and service sectors are seeing the effects of the problems in America."

Jones believed that although the underlying signs were good, the cut was the right decision.

"Although the UK's economic fundamentals are strong, down the line business pessimism could feed through to consumers. With earnings still subdued, despite a fall in unemployment, this was a good time to take pre-emptive action," he said.

The TUC's general secretary, John Monks, voiced his support. "This was the prudent decision. With no great inflationary pressures in the UK, and real dangers from fall out from the US economic downturn, this was the only sensible decision. The Bank must be ready to cut again soon if there is any sign of growth stalling in the eurozone," he said.