By Rob Arkwright, Hargreave Hale Ltd AS expected, the Bank of England cut interest rates by a further 0.25 per cent, taking the figure down to 4.5 per cent -- a 38-year low.

There are mixed forecasts over the direction of the economy with retail sales rising last month at their fastest rate for five years.

But the housing price boom is appearing to slow down which could only be expected after such a strong run.

However, the continued manufacturing slump combined with the further rate cuts in the US appear to have been the overriding factors, putting pressure on the Monetary Policy Committee to cut rates again to try to avert the much feared global recession.

The US Federal Reserve cut their interest rates on Tuesday by a further 0.5 per cent to their lowest level for almost 40 years. Although the UK market has recovered somewhat since the terrorist attacks, the full impact is beginning to be felt by many companies.

The airlines in particular have seen a huge decline in passengers and many flights have been grounded.

British Airways, which relies heavily on transatlantic flights for its profits, has seen a loss of £48 million in lost revenues from grounded flights. British Midland has also been badly affected and has had to withdraw eight aircraft and announce up to 600 job losses.

Swissair had to ground its entire fleet on Tuesday as it was unable to pay fuel bills or landing fees. The Swiss government is currently trying to come to the rescue and provide up to £190 million to help it start flying again.