Unemployment will rise and wages and house prices fall but Britain should narrowly avoid another recession the Bank of England predicted as it delivered more bad news for savers and pensioners by unveiling the lowest interest rates in history.

Even borrowers could lose out amid fears banks might not pass on the cut in the base rate to their customers.

As the UK struggles to contain the fallout from the Brexit vote, the bank also unveiled a surprise package worth £170 billion in support for the economy.

At a press conference in central London governor Mark Carney predicted that the economy would "immediately” feel the effect of the emergency decision to slash interest rates.

But he admitted millions of consumers could miss out, as he warned banks they had "no excuse" not to pass on the cut.

And he hinted the UK could still tip back into recession, pledging more help should it be needed, including potentially another rate cut.

The new Chancellor Philip Hammond also appeared to write a blank cheque to the UK economy, saying in a letter that he was prepared to take any steps necessary to come to its aid.

Meanwhile, a series of newly downgraded economic growth forecasts signalled tough times ahead for millions.

By 2018 the economy will be £45bn smaller than previously thought, with real earnings £615-a-year lower and household incomes down £680-a-year, an analysis of the figures by the Resolution Foundation think tank found.

The new low of 0.25 per cent, down from 0.5 per cent, is the first time the bank has cut interest rates since March 2009, during the height of the financial crisis.

A new scheme will also provide up to £100 billion to encourage banks to lend to households and businesses.

More controversially the money-printing Quantative Easing (QE) policy, blamed by some for driving up property costs and depressing pensions, is to be resurrected.

The bank also plans to spend £10 billion buying up the debt of UK companies.

Economists welcomed the moves, although they questioned whether they would be enough to stabilise the economy.

Experts also warned that savers would face a "lost decade" of returns.

Laith Khalaf, a senior analyst at Hargreaves Lansdown, said: "The nightmare for savers continues.. if anything things are getting worse, not just because savings rates will fall, but because inflation is forecast to rise, eroding the buying power of cash in the bank."

Pensioners who rely on returns from their savings to generate income are expected to be particularly badly affected.

Richard Eagling, head of pensions at Moneyfacts, warned that the interest rate cut would also have a negative effect on the "already precarious" funding position of the final salary pension schemes of many companies.

Around half of borrowers are thought to be on fixed rate mortgages and will see no immediate impact in their monthly bills.

Jack Meaning, Research Fellow at NIESR, said that the newly released figures suggested that without the bank's intervention the UK would have entered "at least a technical recession" over the next 18 months.

Stewart Hosie, the SNP’s Treasury spokesman, welcomed the rate cut, but questioned its impact.

''The problem for Philip Hammond is that this cut in itself does not create the much needed demand in the economy – or help encourage the growth we also desperately need,” he said.

He called on the Chancellor to scrap austerity and deliver “economic stimulus”.

That view was echoed by James Sproule, from the Institute of Directors, who said that 6 in 10 of his members did not believe the rate cut would affect their business.

He called on Mr Hammond to bring forward his Autumn Statement mini-Budget, describing it as the "real test of confidence".

John McDonnell, Labour's shadow chancellor, warned that the UK was now "on hold" waiting for Mr Hammond to act.

"The more the Chancellor dithers, the greater the potential cost to the British economy," he said.

But Mr Hammond gave no indication that he intended to fast-track his first Autumn Statement, saying that he would take the summer to study would the impact of Mr Carney's reforms.