Liberal Democrat leader Vince Cable, a former Business Secretary, said:

“This marks a significant change of direction towards a world of higher interest rates after almost a decade on the life support of ultra-cheap money.

“The move comes amid growing signs of economic weakness, particularly the uncertainty of Brexit. This will present a serious problem as many individuals, families and companies rely increasingly on borrowing to get by.

“We are already seeing signs that consumers are losing confidence. If consumers get the idea that interest rates are going to rise further, pushing up the cost of servicing their debts, this will kick one of the few parts of the economy that was working.”