MANUFACTURERS and homeowners last night welcomed the Bank of England's decision to cut interest rates by a quarter-point.

The move by the Bank of England to reduce its base rate to 4.5 per cent was welcomed by industry leaders, following the UK economy's worst growth rate in 12 years.

Unions said the process could now begin dragging the manufacturing sector out of recession.

Weakness in retail and manufacturing sectors prompted yesterday's widely-trailed cut, although economists warned further moves by the Bank were far from certain.

George Cowcher, chief executive of the North East Chamber of Commerce, said: "Lower interest rates will help many companies - in particular manufacturers and those importing and exporting goods.

"We hope that this move by the Bank of England will reinvigorate key sectors that are the bedrock of the North-East economy."

The manufacturing sector, which is in recession after output contracted 0.7 per cent in the second quarter of 2005, greeted the Bank's decision with huge relief, according to the TUC.

Members of the Bank's Monetary Policy Committee have sat tight on rates for a year, but they may have been encouraged by evidence that house prices were growing at a slower rate than wages for the first time in nine years.

Some mortgage lenders were quick to pass on the impact of the base rate cut yesterday, with the Halifax reducing its standard variable rate from 6.75 per cent to 6.5 per cent.

The lower rates will see about £15 a month knocked off the cost of an average £100,000 mortgage, putting back some of the £70 a month hike seen since the Bank started increasing rates in November 2003.