The call came as Bank of England policymakers prepare their response to the worst financial turmoil in living memory.

Virgin billionaire Sir Richard Branson called on the Bank's Monetary Policy Committee (MPC) to slash rates as much by as one per cent tomorrow.

The British Chambers of Commerce - who warned that the UK is already in recession - and the CBI business group both pressed for 0.5per cent cuts.

The MPC have held rates at five per cent since April because of inflation fears .

But the unprecedented chaos in financial markets threatens to tip the UK into a deep recession.

Since the collapse of US bank Lehman Brothers on September 15, there have been bailouts and nationalisations on both sides of the Atlantic London's FTSE 100 Index plunged to its biggest fall since Black Monday in 1987 this week.

Branson - who also called for the UK to guarantee all UK savings deposits - said: "I think there should be a very big drop, as much as one per cent."

The MPC have been deterred from lowering rates so far because soaring oil, food and energy bills have pushed inflation to more than double its two per cent target at 4.7per cent.

But with oil prices now below EUR100 a barrel, economists think that recession has replaced inflation as the immediate threat to the country.

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