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BDO survey points to interest rate rise

A extremely rosy picture painted by BDO's latest economic survey could point the way to a rates rise by the Bank of England next week.

Link: Interest rates left unchanged

BDO’s output index of gross domestic product reached its highest level in a decade, up from 100.8 in January this year to 101.4 last month, which suggests that the consumer price index could rise above the Bank’s inflation target of 2%.

One analyst said the BDO survey suggested that price pressures were building significantly – but it is in sharp contrast to official figures, which show UK inflation down to just 1.1% in March.

‘The chancellor shouldn’t start celebrating yet,’ said Peter Hemington, partner at BDO Stoy Hayward.

‘Consumer spending is still contributing heavily to the boom but this will change as debt burdens increase with higher interest rates.’

The monetary policy committee will decide on Thursday whether to push interest rates above 4%.

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