THE Bank of England has slashed interest rates in a bid to stave off a Brexit-induced recession but fears over job losses and falling houses prices remain.

The Bank today (Thursday, August 4) cut rates to a new historic low of 0.25 per cent to ward off the impact of the EU referendum vote.

It also announced a £170bn emergency package to boost the slowing economy and said rates could be hacked back to a little above zero by the end of the year if growth decelerates as expected.

However, the decision to trim the rate, from its seven-year mark of 0.5 per cent, is a worrying moment for the UK’s economy, according to North-East business leaders, who said the Bank should have waited for greater stability.

But the Bank says it has taken action to give the economy much-needed stimulus amid reports the country is closer to a recession after the manufacturing, construction and service sectors all slumped following the Brexit vote.

According to the Bank’s Monetary Policy Committee, its economy-boosting action will see it fire up the printing presses to expand its £375bn quantitative easing programme by £60bn to £435bn, buy £10bn of corporate debt and deliver up to £100bn to encourage banks to lend to households and businesses.

Mark Carney, Bank governor, warned the changes may prove difficult and take time, with employment and house prices expected to receive an initial hit, though he said the UK can handle it.

He also said policymakers had delivered a “timely, coherent and comprehensive” package of measures and that the rate cut would be felt “immediately in the economy.”

Mr Carney added: “We have improved the economic outcomes for this country.

“However, near-term weakness in demand is likely to open up a margin of spare capacity, including an eventual rise in unemployment.

“Consistent with this, recent surveys of business activity, confidence and optimism suggest the UK is likely to see little growth in GDP in the second half of this year.”

But the North-East business community has reacted with caution to the move.

John Elliott, founder and chairman of washing machine and dehumidifier maker, Ebac, based in Newton Aycliffe, County Durham, said the focus must be on addressing the import and export balance.

He said: “The fundamental problem is that we consume more than we produce.

“The easiest way to get our finances into balance is to manufacture things we import.

“We reduce the pain by printing money, having low interest rates and selling our assets.

“If our situation was that we were supplying more than we consume it would be a totally different story.”

Nigel Mills, chairman at the North East Entrepreneurs’ Forum, added: “The decision to cut rates is deeply concerning at a time when we need to prioritise stability.

“We need solid data on the economic effects of the EU referendum before making any minor changes to rates.”