Economist Chris Williamson has told talkRADIO that the country "could be on the verge of a recession" after the Bank of England announced a cut to the interest rate today (Thursday).
In the first reduction since 2009, the rate has been cut from 0.5% to 0.25% in an attempt to stabilise the British economy post-Brexit.
As a result, economy growth is now expected to be just 0.8% next year, as opposed to the 2.3% forecast in May.
Williamson, chief economist of information, analytics and solutions specialists Markit, spoke to Julia Hartley-Brewer before the announcement.
"If your mortgage rates come down, you in theory have a little bit more money to spend on other things – that gives the economy a boost," he said.
"You end up in a situation when savers, such as pensioners, who aren't getting interest on their savings start cutting back on their spending.
"So there is a limit as to how low you can go.
"This is really where central banks and what we call monetary policy does come up to its limits, because all that a central bank can really do is improve the supply of credit."
He added that the rate reduction could signal a more general downturn in the economy.
"We are on the verge of a recession unless something’s done soon," he said.
"It's looking increasingly like it needs to come through the government from what we call fiscal measures – cutting taxes or boosting government spending on initiatives to give the economy a boost."
Listen to the full interview to find out more about how the rate reduction might affect the economy – and your pocket.