An emergency cut in interest rates later today (Thu) will not be enough to prevent an economic downturn, an influential think tank has warned.

Prime Minister Theresa May should also increase government spending to help Britain weather the aftermath of the shock Brexit vote, according to the Institute for Public Policy Research (IPPR)

The governor of the Bank of England Mark Carney is expected to unveil the first cut in seven years later.

Economists predict that the central bank will slash rates to a new historic low, from 0.5 per cent to 0.25 per cent, as it bids to ward off a possible recession.

Critics warn that the move will hurt savers, who have already been penalised by years of historically low interest rates.

But supporters say the move would help borrowers and offer a much-needed boost to the economy.

However, experts suggest that with rates already so low the move could have little effect.

Fears of a recession were fuelled yesterday by confirmation that the Brexit vote led to the worst plunge in services sector results since the last recession.

Earlier this week another think tank, the National Institute of Economic and Social Research [NIESR], warned that the UK was heading for a “marked” slowdown in the wake of the Brexit vote as it predicted a 50-50 chance of recession before next Christmas.

The last time the central bank cut rates was in March 2009 at the height of the financial crisis.

Mr Carney himself warned in May that a Brexit vote could trigger a recession.

Since then he has said that many of the risks previously predicted have begun to "crystallise".

Leading businesses have suggested that they could move billions of pounds of investment and thousands of jobs out of the UK.

The pound has also plunged in value following the referendum result.

Consumer confidence has also fallen sharply while there have been signs of strain in the commercial and residential property markets, although the financial markets have been resilient.

The Ippr warns that the expected interest rate cut will not be enough to arrest the effects of Brexit and argues that only investment will stave off a downturn.

the think tank calls on Mrs. May to ease austerity measures that it claims are choking off investment.

Instead, the Treasury should erase the UK’s budget deficit more slowly.

Ministers should also spend on infrastructure to boost the economy.

Alfie Stirling, from Ippr, said: “At this stage, further cuts in interest rates can only get us so far before they fail to boost the economy at all and even start to cause harm.”

He warns against “trying to stay afloat in a storm with one hand tied behind your back”.

“The Chancellor has already hinted he will ‘reset’ government spending policy – but he must be prepared to do this properly. It is not enough to wait for the economy to stall, and then simply borrow more to cover the costs of increased welfare and reduced tax receipts. We need to use government spending as a preventative measure, like interest rates, to keep the economy moving.”

Jack Meaning, from NIESR, said that the Bank needs to use a "sledgehammer" to offset a deepening downturn in the economy.

Meanwhile, Mrs May will today (THU) meet small business leaders to vow their voices will be heard in the Brexit negotiations.

The Conservative leader said: " I want to build an economy that works for all, and that means working with, and listening to, smaller firms."