The Bank of England has been handed vast new powers to pump money into Britain’s banks without sign-off from the Treasury.

Philip Hammond, the Chancellor, is giving the Bank an extra £1.2bn in a capital injection which officials can then leverage up to give out loans totalling more than £750bn.

It comes after the Bank’s Monetary Policy Committee voted by six members to three to keep interest rates flat – but chief economist Andy Haldane voted to put rates up to 0.75pc, sending markets into a frenzy of speculation that rates will rise in August.

At the annual Mansion House dinner in the City of London, the Chancellor reiterated his call to make sure the UK does not become a rule-taker from Brussels, and can instead continue to lead the world in high-quality ­regulation.

If the City does have to follow European rules, it could undermine its “stability” as the regulations are increasingly designed to “force the location of business into the EU”.