British interest rates are expected to rise for the first time in nearly four years this week as more evidence emerges that the British economy is recovering fast.
"The recent run of very strong survey evidence makes a 50 basis point rate hike more likely than no change at Thursday's meeting," said Mr John Butler, UK economist at HSBC Markets, who is predicting a quarter-point rise.
Financial markets started pricing in rates nearly two percentage points higher than now by the end of 2004 after the Chartered Institute of Purchasing and Supply/Reuters purchasing managers' index rose to 54.2 in October against expectations of 53.2.
That indicated the fastest expansion in manufacturing since December 1999 and the output index rose to its highest level since September 1996 before the sharp rise in sterling's exchange rate sent the sector into its long downturn.
And the Confederation of British Industry said its monthly retail sales balance in October rose to +35, its highest since April 2002 and retailers expected a further pick-up this month.
"This is a solid pick-up," said Mr Ian McCafferty, CBI chief economic adviser.
"With rising house prices, low unemployment and consumers happy to borrow at record levels, retailers believe this stronger growth will persist. After the knocks from tax rises and the Iraq war earlier in the year, this revival in consumer confidence is good news for the wider economy."