The Bank of England’s decision to cut interest rates to a record low of 1.0 percent may have been widely predicted, but this did little to hold back the avalanche of commentary that began the moment the news came through at noon today.

Interest rates, which have now been cut five months in a row, are at the lowest level in the Bank’s 315-year history, and the list of people calling yet another easing pointless appeared to be getting longer.

Economist Ros Altman, writing on www.theguardian.co.uk, said: “This is another policy mistake. More panic cuts are not the answer to our economic crisis. Policymakers are desperately trying to boost the flagging economy and encourage more spending… but lower rates are a very crude weapon. They punish those who have got money to spend while benefiting the very groups (banks in particular) whose actions caused the mess in the first place.”

She wasn’t alone. BBC blogger Stephanie Flanders wrote: “It is hurting. But so far it isn’t working… Savers say they are being punished for nothing - rate cuts are hitting their income, while having less and less impact on the economy at large. They have a point.”

Meanwhile, Melanie Bien, of mortgage brokers Savills Private Finance, was quoted in several publications as saying: “Today’s cut was expected by the markets. It will assist those on base-rate trackers with no collars or standard variable rates if those lenders pass on any of the cut. But beyond that it will have little effect.”

The Sun didn’t hold back either, calling the rate cut a “desperate attempt to revive the flagging housing market” while The Daily Mail website said the MPC was “going for broke”.

Proponents of the drop were harder to find, but not non-existent. Ashley Seager, writing for The Guardian, said: “The argument doing the rounds that the Bank should have left interest rates at 1.5% while carrying out quantitative easing is nonsense. While it is true that the real problem has become the quantity, rather than the price, of credit, the idea that cutting rates makes no difference is simply not true.

“With around 40% of homeowners on tracker mortgages, the impact on many households’ families is immediate, and will reduce the burden on those homeowners unfortunate enough to have lost their jobs.”

Ian McCafferty, chief economic adviser to the Confederation of British Industry, was quoted as a supporter of the cut. “This drop in rates should support business confidence and, when added to recent cuts of the past couple of months and the fall in the pound, provides a very significant stimulus to the ailing economy.”

There was however a general consensus that rate cuts alone are not the answer to the economic crisis and that the Bank of England should do more to get banks lending again.

Have your say on the rate cut by posting a comment here.

The year 2008 has been filled with unprecedented events and all-time lows, a financial system overhaul and global turmoil. Could the New Year herald positive re-evaluation and a positive turnaround? And in what has been a year of sleepless nights for many, will a nation steeped in debt start to curb excess?

Rate cuts figured high on the news agenda as banks undertook radical measures to stabilise the economy. Within the space of one week, Britain saw the lowest base rate since the mid-1950s, the ECB took its rate to a two-and-a-half year low, the U.S. Federal Reserve aggressively slashed rates and a 175 point reduction was made by Sweden’s central bank.

The key question remains – will governments run out of weapons to boost the economy in 2009?

Gazing into a crystal ball has never been quite this tricky, and perhaps the most accurate prediction from industry experts is that policymakers will likely find themselves strapped for more tools to combat the crisis.

To the average citizen, sophisticated financial gadgetry will not alleviate fears of rising unemployment levels and inflation worries. Borrowing costs for those whose home equity and other floating-rate loans are tied to the prime interest rate may have seen some relief from rate cuts, but the gain has been negligible for others.

Early this month, the IMF’s chief economist Olivier Blanchard opined that the host of government rescue measures may have brought global economies back from the brink of the worst financial catastrophe in more than 60 years, but did not remove it from the danger zone. Progress had been made, he conceded, but insisted it was “much too early to declare a victory.”

On November 6, the IMF cut its world growth projections to a mere 2.2 percent, emphasising the need for an immediate fiscal stimulus. “At this point, the goal should be fiscal boost of about 2 percent of global GDP,” said Blanchard. He remained optimistic that this would translate into a corresponding 2 percent increase in global growth.

Two weeks ago, Bank of England Deputy Governor Charles Bean said zero interest rates were a future possibility for Britain. Both the Fed and the Bank of Japan have adopted a near zero interest rate policy, with the former stating a willingness to keep rates low for an extended period.

It is worth noting however, that the co-ordinated round of rate cuts by central banks worldwide in October did not have the desired immediate impact on the state of the financial system.

Until market risk aversion eases, lowered interest rates may not impact the economy to the extent that governments would like. Additionally, as banks further their attempts to deleverage, we may very well see small bursts of stability, but a period of sustained growth seems unlikely to return in 2009.

In the interim however, we can certainly hope that some confidence is returned to both frazzled consumers and strained financial markets alike. And while extensive borrowing and emergency measures will increase countries’ debt, shoring up resources to prop up the global economy is set to be the overriding priority for a long time to come.

Chancellor Alistair Darling has delivered a 20 billion pound fiscal stimulus package to get the nation spending again and mitigate the worst effects of the downturn.

He cut VAT to 15 from 17.5 percent just in time for Christmas shopping – a move he said would put some 12.5 billion pounds in consumers’ pockets over 13 months. Other measures include well-leaked plans to help homeowners, small businesses, parents and pensioners.

But government borrowing will more than double to 78 billion pounds this year and 118 billion next year before starting to come down. Darling says he will bring the public finances back into balance by 2015.

The package now sets in stone the diverging approaches towards the downturn being adopted by the main two parties. Labour is effectively spending its way out of recession, the Conservatives — against the run of most independent economic advice — have opted for caution. Shadow Chancellor George Osborne said the plans amounted to “putting a time bomb,” set to explode in the future, under the nation’s finances.

What do you think? Is this a bold and innovative way to get the economy moving again or a dangerous, debt-fuelled gamble?

David Cameron’s decision to ditch a major Conservative pledge to match Labour spending plans pound for pound was hailed by commentators as an important step in the politics of the recession, opening up a clear gulf between the two main parties’ economic policies but exposing the Tories to considerable risk.

Labour is expected to cut taxes, accelerate public spending and announce more borrowing in Monday’s pre-budget report. Now their supporters can revive the spectre of “Tory cuts” to funding for schools and hospitals which helped the Conservatives lose the last two elections.

For many of the newspapers, this is all part of a game being forced on the Tories by Gordon Brown’s rapid resurgence in the polls thanks to the economic crisis. A Mori poll this week found the once-mighty 26-point Conservative lead has slumped to just three points — equivalent to a Commons majority of four seats.

“In the extraordinary game of chess that is being played out against the backdrop of the recession, Cameron had no choice,” wrote The Independent. “But there are big risks for the Tories. Most non-partisan economists recognise the case for higher borrowing to pay for a fiscal stimulus. The Conservatives are virtually on their own in claiming spending cuts are an immediate answer.

“Spending cuts are also easier to announce than they are to implement, not least when the Conservatives have some ambitious spending programmes of their own. If Cameron comes up with any pain-free cuts, Brown will implement them first, as he did in the run-up to the last election.”

The Guardian said a curiously quiet period in British politics has come to a close with the announcement.

“Over the past few months the economy has been in wartime, beset by a banking crisis and a global recession, while politicians have been unsure how to react. Sure, Gordon Brown got his fill of summit-hopping. But most MPs have been little more than restive spectators of a crisis which will define economic policy for years to come and set the terms of the next election. That all ended yesterday.

“The political battle lines have now been drawn around one key question: who can best manage the recession?”

The Financial Times was in no doubt of the importance of Cameron’s policy tack. “He has taken one of the biggest gambles of his near three-year tenure … bucking the corporate and economic consensus to bet on a fundamental shift in voters’ attitudes in the next election,” it wrote.

“He believes he will be proved right in the long term as the recession deepens and voters increasingly blame Mr Brown for the state of the public finances rather than turn to him as the best hope for economic recovery.”

That may be a good move, the paper added, if the election comes in 2010 but could backfire if, as some commentators are suggesting, Brown decides to go to the country before things get too bad.

Several papers applauded Cameron for opening up a clear choice for voters in how deal with the coming hard times.

“On the big issue of the day, the route out of recession, there is now a genuine choice,” The Times said, while the Daily Mail declared: “With one bold decision, Mr cameron set himself free to offer a meaningful alternative of real substance.”

The Daily Mirror spoke of thick red lines now having been trawn between the two parties and warned the Conservatives  were missing the public mood.

“Every nurse, care worker, soldier and their families now has a vested interest in voting Labour,” it wrote.

But The Sun applauded Cameron’s move. “Labour seems ready to gamble the entire economy on a “cut now, pay tomorrow” burst of tax reductions financed by ever-higher borrowing,” it said. “That is the economics of the madhouse.”

“At last the Tories seem to be finding their voice. They have decided to put hard-working taxpayers first — and dump their daft promise to match Labour’s bloated spending.”

The Bank of England’s 50 billion pound credit swap for banks hit by the global credit crunch leaves a “sour taste ” for the Daily Mail, which accepts it is a necessary evil.

“How could allowing banks to swap their risky mortgage and credit card debts (amassed during years of lunatically-excessive lending) for cast-iron Government bonds be anything else?,” it asks. “So much for moral hazard.”

But for the Financial Times the Special Liquidity Scheme, which will swap banks’ risky mortgage assets for easily tradeable government debt, is “cleverly designed and welcome move to ease liquidity troubles.”

It says the scheme will protect the tax payer and does not absolve the banks of the consequences of their past lending mistakes.

The Times is also impressed by the “sensible and imaginative response” to the credit crunch but said Britain’s financial authorities took too long to accept the financial markets crisis was hitting the wider economy.

The deal is the “least-bad option available to economic policymakers“, in the view of the Independent, which calls for an inquiry to determine how the regulatory system broke down.

The Daily Telegraph says the scale of the operation is “startling” and says it is now up to the banks to make sure it works.

Both the government and the Bank of England are to blame for leaving taxpayers and borrowers more vulnerable to the global financial crisis.

“Monetary policy has been too lax, borrowing was allowed to spiral, despite a long period of economic growth, and the banks used the era of cheap credit to pursue reckless lending strategies,” the Telegraph said.