The Bank of England reduced interest rates on Thursday by 1.5 percentage points to 3%.
UK rates are now at their lowest since 1955. It was the biggest cut in official interest rates since 1981.
The BoE said the economic outlook had got a lot worse and drastic action was now needed.
Economists said more rate cuts would still follow and it was possible Britain could soon have rates the same level as in the United States - 1%.
The European Central Bank and Swiss National Bank also cut interest rates on Thursday.
The ECB lowered eurozone interest rates from 3.75% to 3.25% and the Swiss rate is 2%.
ECB president Jean-Claude Trichet said further cuts could not be ruled out.