The Bank of England has warned the UK could be heading for the longest recession in 100 years.

A 0.75 per cent increase by the Bank has pushed up the cost of borrowing to three per cent, in the biggest single interest rate rise since 1989.

It is the latest in a series of eight interest rate rises since last year, but the Bank said it won't guarantee victory in the war against double-digit inflation, as reported by The Guardian.

The recession that began this summer is now expected to last until the middle of 2024 - when the next general election is due.

The Bank of England expects inflation to fall to zero by 2025, and analysts at investment bank, Berenberg Bank, are forecasting one further rate rise, to 3.5 per cent.

Homeowners with tracker or variable rate mortgages will feel the impact of the rate rise immediately, while the estimated 300,000 people who must remortgage this month will find that fixed-rate mortgages are at levels not seen since 2008.

The Bank of England now predicts inflation, which hit 10.1 per cent in September, to peak at 11 per cent by the end of this year, and then to fall sharply from the middle of next year.

The chancellor, Jeremy Hunt, said the Government's main priority is to get a grip on inflation and the Bank's action is in line with the objective of returning inflation to target.

In his autumn startement on November 17, the chancellor is expected to announce a package of tax increases and spending cuts worth up to £50bn.