INDUSTRY NEWS

Europe raises, UK freezes

The European Central Bank (ECB) has raised its interest rate while leading economists have suggested the Bank of England will keep its rates on hold.

It increased rates to 4.25 per cent – despite this, nine British economists all declared their belief the Bank will leave rates untouched.

Richard Snook, from the Centre for Economic and Business Research, said: "We are expecting a hold at the meeting next week."

Fellow economists from Lloyds TSB, Capital Economics, RBS, HSBC and Halifax all predicted "no change" and Howard Archer from Global Insight claimed a rate fix was "most likely".

Simon Hayes, senior UK economist at Barclay’s Capital, noted the Bank’s difficult position. He said rising inflation could force rates up, but warned that falling growth could create an output gap.

He concluded: "Caught between those two risks, I think they are going to stay put."

A spokesperson for Nationwide echoed the consensus but claimed there was a 20 per cent chance rates would rise.

Any increase could affect the availability of credit and hamper plans to purchase commercial property in London.

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