The Bank cut interest rates to 4.75% from 5% in a move that had been widely expected. But it indicated that while the extra spending outlined in the Budget would initially boost growth, measures such as raising the cap on bus fares and VAT on private school fees would push prices up at a faster rate.

The Bank of England cut interest rates on Thursday for only the second time since 2020 and said future reductions were likely to be gradual as it predicted the British government's first budget would lead to higher inflation and economic growth.