Interest rates could drop to 4.5 per cent by the end of this year.
That is according to Global Insight, which insisted that such cuts to the base rate could occur, provided that circumstances were favourable.
Howard Archer, chief European and UK economist for the company, said that this prediction was "based on [the] assumption that the UK will avoid recession, but will see extended below-trend growth".
"Specifically, we forecast GDP growth to be limited to 1.8 per cent in both 2008 and 2009, which would be the equal weakest performance since 1992."
Mr Archer added that there was a "very real possibility" that interest rates could fall even further due to the increasing "downside risks to the UK economy".
Global Insight also predicted that the first half of 2009 would see the base rate cut to 4.0 per cent.
The interest rate currently stands at 5.5 per cent.
