The Bank of England has increased interest rates for the first time in a decade.

It has raised the official bank rate from 0.25 per cent to 0.5 per cent putting millions of mortgage borrowers under increased financial pressure.

In a statement today the Bank of England said: "Business investment is being affected by uncertainties around Brexit, but it continues to grow at a moderate pace, supported by strong global demand, high rates of profitability, the low cost of capital and limited spare capacity.

"CPI inflation rose to 3.0 per cent in September. The Monetary Policy Committee still expects inflation to peak above three per cent in October, as the past depreciation of Sterling and recent increases in energy prices continue to pass through to consumer prices."

"The decision to leave the European Union is having a noticeable impact on the economic outlook."

Ian Mean, (pictured right) Gloucestershire director of the business group, Business West, said the increase was a "watershed moment" if fairly predictable.

"I think that the big question is : Will there now be more rate rises? For the average householder in Gloucestershire, the increase to their mortgage will only be around £12-£15 a month," said Mr Mean.

"Not much most of us might think but for a young couple looking to buy their first home with little room for financial manoeuvre, an extra £15 a month could be an added worry.

"But the issue here now for this watershed moment—the first bank rate rise for 10 years-is that there must now be concerns that more rises will follow.

"The losers will be people, and there are something like 3.7 million of them, who have variable or tracker mortgages who now face rises in their monthly payments.

"Those householders with fixed mortgages will benefit from today's decision of course with no rise in their payments. But in recent weeks, a lot of these fixed deals have been closed down in anticipation of today's rise in bank rate.

"The winners will be the savers-especially many pensioners-who have seen their savings stay static for years.

"I was just watching Sky News before the rate decision came through. A pensioner in Gloucester said he thought he had been "robbed" over the last decade by the lowest interest rates on his savings.

"The Bank of England, of course, points to the fact that inflation has now risen to three per cent and there is a need to try and keep it down to its target two per cent.

"However, there appear to be many businesses in what a report this week called "significant" financial distress—something like 448 000 of them according to the business recovery specialist Begbies Traynor.

"This rate rise will not help many of those businesses in trouble, and there are also concerns that the jittery economic situation will affect spending in the shops as we approach Christmas.

"So, the big economic question remains: What next?"

Rain Newton-Smith, CBI Chief Economist, said: "The decision to raise interest rates comes as no surprise, given the recent signals from the Bank and several Monetary Policy Committee members signalling their intention to vote for a change of course.

"While it's the first rate rise in over a decade, it is only taking the rate back to the level seen in August 2016 and at 0.5 per cent it remains near rock bottom.

"Businesses will be watching the reaction of consumers closely and what's important is the pace of any future rises. As rates creep up, it'll be important to keep an eye on the impact for those at the lower end of the income scale."

Mike Cherry, Federation of Small Businesses (FSB) national chairman, (pictured right) said: "Today's rate rise will

mean yet more cost pressures for small firms as they battle spiralling prices and flagging consumer demand. An increase was inevitable at some stage so many businesses will have expected today's rise. But that's not to say they can absorb more hikes in the short-term. This change must be allowed to properly bed in before further increases are considered.

"Only one in ten small firms is currently applying for external finance and we have a chronic issue with permanent non-borrowers in the small business community. Today's rate increase could heighten the sense that borrowing is too expensive if you're a small firm. That would threaten investment, growth and job creation."

Graham Toy, chief executive of the National Association of Commercial Finance Brokers (NACFB) said: "Today's interest rates rise will likely be the first of many.

"Some of the more insightful SME's may well have factored an interest rate hike into their financial plans but with interest rates having been so low for so long, many SME's will have just assumed the benign cost of borrowing will continue.

"If we are now heading into a period of small, slow and steady rate increases, this is likely to become an important factor in the future plans for many businesses."

Lea Karasavvas, managing director of Prolific Mortgage Finance, said: ""Mark Carney has handed a generation of borrowers, who have never experienced a rate rise, the fright of their life. But if he hadn't, Halloween would have been only the second scariest event of the week.

"The Bank faced a terrifying loss of confidence if it balked again, after one of the most hyped run-ups to a rates decision in history.

"The market, convinced it was coming, had already voted with its feet. The pound had climbed, swap rates had risen and every lender bar Nationwide had increased interest rates in anticipation."

Mark Posniak, Managing Director, Octane Capital, said: "Given the near hysterical build-up to this first interest rate rise in a decade, you'd think rates were going up to five per cent and the future of the UK economy was at stake.

"Rates have simply gone back to a level that itself was an all-time low for the best part of a decade.

"What the Bank has effectively done is send up a flare, announcing to homeowners and businesses that the artificial rate environment we have been in for so long will, at some point, come to an end, especially with inflation as high as it is."