Following Asia's lead, European markets are down Thursday due to persistent worries about the length and depth of the unfolding global recession. In Britain, yet another large central bank interest rate cut was announced to combat the downward economic trend.

Bank of England seen in City of London, 08 Jan 2009

Given the scale of the economic problem, the Bank of England has been spurred into yet another base rate cut, its fourth in as many months. This one, half-a-percentage-point drop, brings interest rates here down to 1.5 percent. That is the lowest level seen in the 315-year history of the Bank of England.

Senior economic advisor Ian McCafferty from the Confederation of British Industry welcomes the confidence-building move, but he says other tools must also be used to get money moving again in the economy.

"We do need to cut the cost of borrowing in order to help stimulate the economy, but I think there is a growing recognition that we actually need other measures as well, what is known in the jargon as quantitative easing, as a way of helping getting credit flows going again. And it is not only the cost of credit, but also the availability of credit that needs to be addressed," he said.

David Buik from the London investment firm BGC Partners agrees interest rate cuts alone cannot solve the problem of a lack of cash flow in the system.

"It is not about interest rates anymore, the bank will also want to leave a little bit left in their locker," he said. "The banks at the moment are frozen. There is no money coming out, there is a limit to how much interest rates can help people."

In London, Paris and Frankfurt the markets were all down for the second day running.

Earlier, the Asian markets all posted falls. Announced job cuts added to the economic woes there. The electronic component manufacturer TDK plans to shed some 8,000 jobs worldwide amid what is expected to be its largest ever annual loss.

Tokyo's Nikkei average lost nearly 4 percent. A similar drop was seen on Hong Kong's main index.

In Europe, unemployment continues to rise. In Spain, it jumped more than expected in December to top the three million mark for the first time in a dozen years.

Under this backdrop of economic gloom, analysts say pressure is mounting for a deep European Central Bank rate cut next week.