Within less than year of being established, the Bank of England had halved rates from an initial 6 per cent in October 1694 to 3 per cent in May the following year.

From 1719 onwards the rate remained unchanged at 5 per cent — for 103 years. However, in 1852, borrowing costs fell to 2 per cent, which remains the lowest interest rate in British history.

After climbing as high as 10 per cent in 1873, rates settled from 1875 onwards, hovering between 3 and 5 per cent, but dropping to 2 per cent 13 times before 1900.

In the twentieth century, interest rates became increasingly significant, with the spread of prosperity and personal banking, home ownership and the birth of the consumer.

Borrowing costs also became increasingly sensitive in a century defined by events which, for the first time, were global in their impact: from two world wars, to the depression in the 1930s and major recessions in the 1970s, 1980s and 1990s.

In 1932, interest rates in Britain were lowered to 2 per cent in reponse to the economic slowdown, and they remained unchanged for the next six years before leaping back up to 4 per cent in August 1939, just prior to the break out of the Second World War.

But just two months later, in October 1939, borrowing costs fell back to 2 per cent and remained at that level throughout the war and for the six years that followed to 1951.

The economic crises of the 1970s took rates to previously unscaled heights: 13 per cent in November 1973, 15 per cent in October 1976 and 17 per cent in November 1979.

Rates were often in double digits during the 1980s.

In 1982, a year which saw continuing industrial decline at home and war abroad over the Falklands, there were 35 changes to the rate. By October 1989, it stood at 14.785 per cent.

On May 6 1997, just four days after the landslide election victory that took Tony Blair's Labour party to power, Gordon Brown gave the Bank of England independence from political control.

In the decade that followed, the base rate peaked at 7.5 per cent in June 1998. The Bank's decisive action in the past three months, in the midst of the financial crisis and ensuing economic downturn, has taken rates to back to 2 per cent, their lowest point in the history of the Bank of England.

Explore Economics

• Pre-Budget Report 2008

• Budget 2009

• World Economic Forum

• The Times MPC

Times Recommends

• C&G axed - 1,660 jobs to be lost
• UK house prices rise 1.1% as buyers return
• Mixed reaction to US banks repaying bailouts