It is the first cut in seven years since the rate hit its previous low of 0.5% in March 2009 after a steady slide that followed the economic crash of 2008.

The bank's Monetary Policy Committee meeting at which the move was discussed was the second to take place since the UK voted to leave the EU.

Bank governor Mark Carney had signaled in the wake of the Brexit vote that base rates were likely to fall.

The MPC surprised economists and investors when it last month kept rates on hold.

Financial markets have been pricing in the cut so are not expected to react sharply.

Despite a recovery in the markets since their sharp fall following the referendum result, many economists are still predicting a downturn in the UK economy.

Surveys of closely-watched purchasing managers' indices (PMI) have pointed to a record fall in business activity last month.

The readings indicated a sharp contraction in the dominant services sector for the first time since the end of 2012.