Pressure for biggest rates cut since 1993

Bank of England rate-setters are meeting under pressure to deliver the biggest cut in interest rates for more than 15 years.

Business leaders are calling for a 1 per cent cut - the largest single move since January 1993 - to ward off the pain of a deep and prolonged recession.

The Bank of England's Monetary Policy Committee (MPC) is widely expected to reduce the official cost of borrowing by at least 0.5 per cent to 4.5 per cent on Thursday, but the CBI business group made clear "strong medicine" was needed.

CBI deputy director-general John Cridland said: "We have talked to businesses of all shapes and sizes across the UK, and the need for a further rate cut is clear.

"The recession into 2009 will be both longer and deeper than expected, and we need the strong medicine of a full percentage point cut."

The Federation of Small Businesses claims 1.5 million smaller firms risk going under and said the MPC would "send out the right message" with a 1 per cent cut.

National chairman John Wright said: "We don't want to head the way of the early 1990s when 1,000 small businesses a week were collapsing."

The MPC cut rates by 0.5 per cent at the beginning of October in a co-ordinated emergency move by central banks around the world to head off the banking crisis.

But official figures since then have shown the alarming pace at which the economy is sliding into recession.

Output shrank by a worse than expected 0.5 per cent between July and September - the first quarter of economic contraction since 1992.

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