THE Bank of England will be forced to make further economic changes to ward off the threat of another recession and the prolonged uncertainty could hit living standards, an expert has warned.

Dr Nikos Paltalidis says he expects fresh action to stimulate the UK’s economy in the aftermath of the Brexit vote.

Dr Paltalidis, a lecturer in finance at Durham University Business School and an expert in monetary and financial economics, also said Prime Minister Theresa May must play a key role in alleviating industry shivers caused by ambiguity over the UK’s future outside the EU.

Dr Paltalidis was speaking after the Bank cut interest rates to 0.25 per cent and closely-watched financial reports, regarded as bellwethers for manufacturing, construction and service companies, warned Britain had moved closer to a downturn.

He said: “In the post-referendum era, the economy is in a period of heightened economic uncertainty.

“This in turn, undermines investment appetites and decision-making.

“The UK has entered unchartered waters and critical questions have to be answered.

“What kind of trade deals is the UK seeking to achieve with EU and non-EU member countries; will the UK follow the Norwegian model?

“Will the UK push for a deal under the terms and tariffs of the World Trade Organisation rules?

“Since the referendum, the economic data suggests a poor picture for the economy.

“The UK economy is heavily dependent on the financial services industry.

“The UK services PMI, which measures services activity, contracted in July below 50, a level last encountered during the financial turmoil of 2008-2009.

“A similar picture is obtained by the manufacturing and the construction sectors.

“The British economy expanded by a healthy 0.6 per cent between April and June, but one must recognise the new data suggests the economy will face a 0.3 per cent to 0.4 per cent quarterly rate decline of GDP for the third quarter of 2016.”

Dr Paltalidis said such worries lead him to believe the Bank will take further action.

He added: “The Bank has slashed interest rates and introduced a £70bn stimulus package to make cheap credit available to the economy and boost business confidence.

“All these measures further undermine the value of the pound, which has already been devaluated heavily against the US dollar.

“This indicates a blow to living standards.

“This is not a cyclical or structural economic problem.

“It is economic uncertainty regarding the future relationship between the UK and the EU, which will continue to dictate the business agenda in the following months, and consequently, any actions taken by the Bank cannot fully offset the economic impacts.

“The Bank as limited room to manoeuvre; monetary policy is close to reaching its limits in this case.

“I am expecting the Bank to intervene again with an additional range of measures to be introduced by the end of the first quarter of 2017 in an attempt to boost the economic prospects and to avoid recession.

“However, the future potential of the economy is up to the politicians who must clarify what actions will be taken and what trade deals will strive to achieve in order to ease economic uncertainty.”