The savings bank, which has a total of 25 million customers, has cut rates on 14 of its products by up to 0.45 percentage points. The bank has also slashed its Premium Bond prize pot.

The announcement is the latest in a series of rate cuts on savings products seen in various banks and building societies. Savings rates have continued to drop drastically since the financial crisis of 2008.

Before 2008, savers were accustomed to earning a minimum of 5% on their deposits. The average rate on an easy-access bank savings account last month was 0.39%.

The bank has pointed to a sharp drop in government gilt yields as the reasons for the cuts, on which many of its rates are based. In order for the bank to maintain its rates, it would need permission from the Treasury to raise funding.

The largest NS&I rate cuts will be on Income Bonds, which will decrease from 1.15% to 0.7%. Similarly, three-year Guaranteed Growth Bonds will drop from 1.7% to 1.3%, and three-year Guaranteed Income Bonds will fall from 1.65% to 1.25%.

The amount of monthly winners of £50 and £100 Premium Bond prizes is to halve from May 1, and the total number of tax-free Premium Bond payouts is to fall by more than 170,000 to 3.29 million, The Times reports.

The average one-year fixed-rate bond pays 1.03% against the bank’s 1.3%. This will also be reduced to 1.15% in May. The Direct Saver account will offer a rate of 0.7% from 1% at present. The bank’s Isa rates will remain unchanged.

Ian Ackerley, chief executive of the NS&I, said: “Reducing interest rates is always a difficult decision. We need to ensure our interest rates are set at an appropriate position against those of our competitors.”