The lowest interest rate in the history of the Bank of England will deter savers from depositing money and further undermine troubled banks, it was claimed yesterday.

Two thirds of savings accounts are set to pay less than 1 per cent after the Bank cut the cost of borrowing to 1.5 per cent yesterday. It has now cut interest rates by 3 percentage points in as many months.

Financial experts warned that the ultra-low rates would not boost the stalled economy.

Ben Thompson, mortgages director at Legal & General, said that the cut in rates could backfire by denying banks the flow of new deposits needed to fund fresh lending.

“What lenders need more than ever are savers' deposits - and they are not going to get them if they can offer only paltry rates of interest,” he said.

Michael Coogan, of the Council of Mortgage Lenders, said: “This is a double-edged sword. Lower savings rates impact lenders' ability to attract deposits and maintain the flow of mortgage lending.”

The average savings rate is currently 1.43 per cent but Moneyfacts, the financial website, predicted that this would now fall to 0.93 per cent. Higher rates of up to 4 per cent remain available, but only to those willing to lock up their money for years. Savers currently have about £944 billion held in banks and building societies.

Michelle Slade, of Moneyfacts, said: “It is going to be a very tough year for savers. Once the latest rate cut is factored in we are expecting to see the lowest returns on record.”

The Bank's decision was criticised by groups representing pensioners, millions of whom depend on income from savings.

Gordon Lishman, director of Age Concern, said: “Many older people who rely on the interest from modest savings to top up their income will be anxiously counting the cost of recent cuts - particularly as so many are already struggling to pay household bills.”

Joe Harris, general secretary of the National Pensioners Convention, said: “An average pensioner with £10,000 in the bank or building society has already seen their income drop by about £6 a week, and today's cut will only make the situation worse.”

This week the Conservatives outlined plans to help to protect savers by proposing to abolish tax on the interest of basic-rate taxpayers' savings.

Alastair Darling, the Chancellor, said that banks should respond to the cut with improved lending facilities. “We have to ensure that having ensured the banking system is there, that it starts to lend, to businesses and to people,” he said. “We've announced a number of measures to do that and as I've made clear, over the next week or so further measures will be necessary.”

George Osborne, the Shadow Chancellor, said that yesterday's rate cut was “necessary” but called on the Government to help savers.

Announcing the rate cut the Bank said yesterday that the economy had probably shrunk faster over the past quarter than in the previous three months, when it slumped by 0.6 per cent. It predicted further falls in GDP.

The cut was good news for many of the 3.7 million mortgage borrowers with “tracker” loans that follow base rates. A household with a £150,000 interest-only home loan will save an extra £62 a month from February 1, and have made a total saving since the start of October of £430.

Some 300,000 homebuyers however, will be denied the benefit of the new rate cut because of a “collar” imposed in small print that limits reductions in their mortgage rates. The Nationwide, Skipton and Yorkshire building societies, and a few smaller lenders, will not reduce tracker rates.

About one million homeowners on variable rate deals will also have to wait and see whether their lender decides to pass on the cut in full.

Only Lloyds TSB, Cheltenham & Gloucester, Nationwide, Skipton and HSBC among leading lenders committed yesterday to passing on the rate cut to borrowers on their “standard variable rate”. Halifax will pass on only a limited quarter-point cut to its variable rate borrowers for a second month in a row.