The Bank of England (BoE) is facing pressure to cut interest rates this week after new evidence suggested manufacturing in Britain is heading back toward recession in January after retail sales fell shy of expectations.
The Chartered Institute of Purchasing and Supply's monthly report on manufacturing published today signalled another contraction in the sector in January as its overall index of activity fell to 48.6, its lowest level in a year.
The Confederation of British Industry said retail sales fell short of expectations in January, with growth picking up only modestly despite massive price cuts after retailers suffered their worst pre-Christmas sales in 10 years.
Economists said the BoE would probably keep interest rates steady at 39-year low of 4 per cent this Thursday but with the stock market down nearly 10 per cent in a month, the case for another cut in borrowing costs was growing.
The nine-member Monetary Policy Committee decides the level of interest rates.