The Bank of England said in a statement Thursday that further measures may be needed to increase the flow of lending to the non-financial sector as it cut U.K. interest rates by half a point to 1.5%, their lowest ever level. The bank said the rate of contraction in activity increased during the fourth quarter of 2008 and that output will likely continue to fall sharply during the first part of 2009. It added the substantial fall in sterling over recent months may help moderate the impact on exports.

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