Interest rate plea from manufacturers

EEF, the industry group, called on policymakers to keep the base rate at 0.5 per cent for another month because of concerns over falling consumer confidence.

The monetary policy committee, which meets on Thursday, is split on the issue but EEF said the fall in output in the final quarter of last year was a “blip” and believes the economy will have recovered in the first three months of 2011.

Subdued wage growth and “imported inflation” means any rate rise will have little impact on prices, it added.

Andy Tüscher, regional director, said: “The case for an immediate rate rise is not convincing. The full extent of fiscal tightening has yet to make its mark, and growth is dependent on a pick-up in private sector contributions from trade and investment. Rates must remain on hold until evidence emerges of a healthier economy.”