The Bank of England has cut interest rates by a quarter-point to 5.25 per cent.

Retailers, under pressure as a result of fragile consumer confidence and a squeeze on shoppers’ finances, will welcome the decision, although the effect is unlikely to be felt for some time.

A succession of rate rises last year was partly blamed by store chiefs for tough trading conditions over the Christmas period, when the retail sector as a whole only managed to generate a like-for-like rise of 0.3 per cent.

Leading retailers – including Home Retail chief executive Terry Duddy and Tesco finance director Andrew Higginson – and trade association the BRC have all called for a cut in the rate.

New BRC director-general Stephen Robertson said: “Having rejected a January rate cut, the bank is right to act now to refuel the faltering economy and ensure it doesn’t stall.

“Household bills are rising and there are job fears. Without a series of reviving rate cuts, consumer pessimism risks becoming self-fulfilling. Discounting moved up a gear over the past three months. Many retailers are suffering, as costs rise much faster than selling prices, so job cuts could be forced upon retailers."

He added: “Even dramatic rate cuts would take months to make a difference. What’s needed is a series of considered, pre-emptive cuts, to avoid the need for Fed-style, last-minute rate slashing later on. Let’s be clear: the sooner the bank cuts again, the better for everyone.”