The Bank of England has announced a cut in its main interest rates of half of one-per-cent -- down to six-point-seven-five per cent.

The bank says the cutis in response to a slowdown in domestic and international economic growth.

The BBC Business correspondent says the decision reflects fears among policymakers that the British economy could slip into recession next year.

The rate reduction is in line with demands from business leaders and and trade unions worried about falling exports and job losses.

In Germany, the Bundesbank has decided to leave interest rates unchanged despite calls for politicians for a cut.