Interest rates have been cut by one percentage point, from three per cent to two per cent, in a bid to boost the flagging economy.

The move follows a dramatic 1.5 point reduction last month and is the lowest level since 1951.

Reaction to the cuts in Scarborough has been split with people noting advantages and disadvantages.

Scarborough MP Robert Goodwill said: “Unprecedent-ed times call for drastic action and obviously cutting interest rates will stimulate the economy but we do need to be careful.

“The first reason is that a lot of retired people rely on interest on their savings to make ends meat.

“The second worry is the effect it will have on the value of sterling.

“The third point is that I’m speaking to a lot of businesses around the constituency who are being told they can’t have access to more credit.”

Chris Bostock, secretary of Scarborough Chamber of Trade, said: “It reduces the loans owed to the banks which is all well and good.

“On the other side the people who have got some money saved up won’t have so much money coming in.”

Andrew Boyes, chairman and joint managing director of Boyes, said: “The interest rate reductions achieve certain ends but also create other problems.

“It’s going to help people with mortgages but it doesn’t help savers. There’s advantages and disadvantages. It’s going to have a negative effect on the value of the pound which is going to have a big effect on the cost of imports.”

Maurice Finnigan, managing director of Sinclair Furnish-ings in Aberdeen Walk, said: “It’s an excellent move and I hope it will help kick start the economy.

“I hope the Bank of England’s lead is followed by the building societies and they lower their rates coupled with pressure being brought on companies to reduce the prices of utilities i.e. gas, electricity, petrol and diesel significantly which would benefit everyone.”

A spokesman for Scarbor-ough Building Society said: “We welcome the Bank of England’s decision to reduce its base rate by one per cent in a further, positive effort to stimulate our financial markets and economy.

“We will be reviewing our mortgage standard variable rate and savings rates as per our normal process following a base rate change, and will announce any changes in due course.

“As always, our priority will be to balance the needs of our borrowers and savers, in keeping with our long term good value promise.”