Sweden cut interest rates by a record 175 basis points yesterday, prompting speculation of dramatic cuts elsewhere in Europe to try to stop a global slump spreading faster than policymakers had anticipated.

Japanese companies slashed spending, showing the economy was in a deeper recession than the government estimated, after US data showed private sector employers axed jobs at the fastest pace in seven years. In a deeper than expected cut, Sweden's central bank chopped its key interest rate by a record 175 basis points to two per cent to prevent the economy sliding further into recession. The Riksbank said it expected rates to remain at that level over the coming year. There was an "unexpectedly rapid and clear deterioration in economic activity since October," it said.