Rising price pressures in the economy are set to lead to more interest rate rises, a business survey has said.
The study, by accountants BDO Stoy Hayward, found business confidence at its highest level for six years, reports BBC News Online
The rise in optimism is set to lead to faster economic growth later this year which could in turn push up the rate of inflation.
As a result, BDO said the Bank of England will have to raise rates again, probably in either April or May.
The Bank of England's rate-setting body - the Monetary Policy Committee (MPC) has raised rates twice in the past four months, taking them to 4 per cent, in an attempt to prevent the economy from overheating.
Few analysts feel rates will go up this month, but BDO Stoy Hayward believes another increase is not far off.
The company’s latest business trends report said companies had increased their output expectations due to stronger consumer spending, an expanding world economy and rising confidence in the financial markets.
"Emerging inflationary pressures, both worldwide and in the UK, mean that a rate rise in the next three months is virtually a done deal," said Douglas McWilliams, chief executive of the Centre for Economics and Business Research who carried out the research for BDO.
No comments yet