Businesses in Northern Ireland are lobbying for interest rates in the United Kingdom to be left on hold next week as the Bank of England warns of possible rises to curb consumer spending.

Industry leaders in the North fear business confidence has plummeted because of the global economic slowdown and the repercussions of the terrorist attacks on the United States last September.

Mr John Stringer, chief executive of the Northern Ireland Chamber of Commerce said any increase on interest rates at the beginning of 2002 could have a seriously negative impact on business performance in the North.

"Life has not been easy for many companies even with the lower interest rates and the general view from the business community is that we have now reached realistic levels in light of the continuing challenges to the economy from all fronts.

"The economic indicators in Northern Ireland such as the fact that house prices rose much slower here than in any other region of the UK underpin our argument for lower interest rates," Mr Stringer said.

He said the message from many businesses going into 2002 was one of caution rather than optimism.

"We expect that it is going to be a very difficult year all round for all sectors of the economy, although Northern Ireland has a larger than normal public sector economy we are seeing strong evidence that other sectors of the economy are struggling, " Mr Stringer added.

According to Mr Nigel Smyth from the Confederation of British Industry in Northern Ireland inflationary pressures on the UK economy remain very weak.

Last year the Bank of England cut UK interests to a 37-year low of four per cent, the CBI believes it could cut them further.

"We do not believe a quarter point move up or down would be a killer blow at this stage but we would expect the next step for the Bank of England would be downwards or at the very least to leave rates on hold.

"Manufacturers are still facing the problems associated with the strength of sterling and consumer spend is likely to drop over the next few weeks by itself," Mr Smyth added.

The Institute of Directors in the North is also warning that any sudden move upward in interest rates could impact heavily on businesses in Northern Ireland.

Mr Eric Bell, chairman of the IOD in the North said: "I suspect that rates may well have reached their lowest point but there would be a clear risk to many companies in Northern Ireland if UK consumer confidence dropped away suddenly with a corresponding fall in demand.