The Bank of England shocked financial markets yesterday when it said three of its policymakers voted for an interest rate increase, the closest it has come to raising rates since 2007, despite signs of a slowdown in the UK economy.

The Brexit squeeze on British consumers has hurt the UK government’s finances as well as retailers, new figures show, indicating that the economic slowdown at the start of the year is now being felt more broadly.

The British economy’s strong finish to 2016 looks likely to prove a high watermark as Brexit gets under way, according to a range of indicators yesterday which pointed to a growing squeeze on consumers.

British retailers suffered their sharpest fall in sales in four years after last month’s vote to leave the EU, raising doubts about the ability of consumers to stave off a Brexit recession.