The cut, effective from 24 September, follows last month’s announcement that savers can deposit just £10,000 into NS&I’s popular growth and income bonds, down from £1m.

Anna Bowes, co-founder of advice site, Savings Champion, said: “As NS&I’s net financing target has been reduced considerably for the current tax year, it’s not an unexpected move from the provider, although still bitterly disappointing for savers.”

Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: “This is a blow to loyal NS&I savers; in a market where other providers are pushing rates up, it’s disheartening to see rates cut, but NS&I had little choice in the matter.

“It has to maintain a difficult balance between offering reasonable rates to savers – and not attracting so much cash that it overshoots its target.”

The good news for savers is that more than half of all easy access cash ISA rates currently pay more than 0.75%, according to Savings Champion.

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The best rate from Al Rayan Bank is paying 1.35%. Paragon is paying 1.31%, and both Shawbrook Bank and Virgin Money offer 1.30%.