The Bank of England dramatically slashed interest rates by 0.5% today along with central banks around the world in response to the global financial turmoil.
It brings the BoE base rate down to 4.5 per cent.
Prime Minister Gordon Brown told the Commons the Bank of England had cut interest rates by 0.5% as part of a world-wide action to combat economic turmoil.
The snap decision by the Bank - a day earlier than expected - came as the Treasury announced a £50 billion bail-out of the banking system.
The Bank's half-point cut is the first such move since the aftermath of the 9/11 terror attacks in November 2001.
Mr Brown also said the Government would be seeking to pay small businesses with public contracts within ten days.
The Prime Minister said the cut in the interest rate would "assure people that all action is being taken" to help business.
Tory leader David Cameron said the banking system "cannot be allowed to fail".
Mr Cameron questioned whether banking executives whose irresponsible behaviour fuelled the crisis would be denied bonuses this year under the deal.
"Taxpayers will rightly be infuriated if they see their hard-earned money going on bonuses that are rewards for failure," he said.