The Bank of England is likely to leave interest rates unchanged this week as British industry squeals ever louder about the danger of a recession, according to a poll of London economists.
Out of 34 economists surveyed, only seven put the chances of another rate rise at over 50 per cent when the bank's Monetary Policy Committee meets this week. Two respondents put the chances at 5050 while the rest all thought on balance that the MPC would leave the repo rate at 7.5 per cent.
The Confederation of British Industry shook markets last week when its quarterly survey showed that manufacturing confidence had suffered its sharpest fall since the depths of the last recession in 1991.
And middle-ranking manufacturers face a bleak outlook after the fastest fall in export orders since the depths of the recession in 1980, a new report has warned.
The gloomy survey of small and medium-sized firms - which between them create most of the country's jobs - adds to fears of a new recession and is being used to support calls for a cut in interest rates.
Export orders over the past four months suffered the biggest drop since January 1980 as the strong pound continued to hit overseas sales, according to the survey by the Confederation of British Industry and chartered accountants Pannell Kerr Forster.
But it was not just exporters who were suffering. The survey also showed a large fall in demand in Britain, fuelling the sharpest fall in total orders since October 1991.
CBI Small and Medium Enterprise (SME) council chairman Mr Colin Perry said: "The outlook for manufacturing SMEs is bleak. Output has fallen sharply and is set to fall further.
"A sharp fall in domestic orders, which took SMEs by surprise, is adding to the problems they were already facing on the export front.
"As a result, SMEs are cutting jobs and expect to make more redundancies in the coming four months.
"With both domestic and export prices falling rapidly there is little pressure on inflation from manufacturing SMEs.
"This week's decision on interest rates is finely balanced, but a 0.25 per cent point cut in interest rates would give the right signal to our growing companies at a time when they are suffering from a strong pound and weakening domestic demand."
Mr John Alexander, a partner at Pannell Kerr Forster, said firms now had surplus capacity at their factories and no shortage of skilled labour.
"It now looks as if icy winds are going to blow through British manufacturing SMEs this autumn and winter," he said.
This has boosted economists' confidence that rates will remain unchanged at the August 5th-6th meeting, although they remain cautious after the MPC surprised markets with its last quarter percentage point rise in June.
Overall the economists gave a 60 per cent likelihood of no change, and 40 per cent likelihood of a rise, according to the median of their forecasts.
And a group of economists, styling themselves the Shadow Monetary Policy Committee, has called on the MPC to leave rates unchanged. This "shadow" committee includes Margaret Thatchers' former economic adviser, Sir Alan Walters, and two of former Chancellor Kenneth Clark's "seven wise men", Mr Patrick Minford and Mr Tim Congdon.
Foreign exchange markets seem to feel the same way and sterling, which has been boosted by a series of quarter point interest rate rises, slumped last week, with the British currency losing almost 2p against the pound to close above 86p.
The MPC, made up of economists from inside and outside the central bank, is charged only with achieving the government's inflation target of a 2.5 per cent underlying inflation rate.
But the CBI and other leading industrialists have mounted a campaign in recent weeks for a rate cut, saying a further rise risked pushing up the pound even more. This has hit exporters and the combination of high interest and exchange rates is risking another British recession.
