Bank to keep stimulus on hold

The Bank of England's rate-setters will hold off on further aid for the recovery this week despite the threat of a another slump looming again over the economy.

The first fall in activity for two years for Britain's services firms – accounting for more than three-quarters of output – has sparked predictions of a 0.2 per cent decline for the economy between October and December when the Office for National Statistics' first estimate of growth is published on 25 January.

But economists say the Monetary Policy Committee is almost certain to hold interest rates at their record low 0.5 per cent on Thursday and keep quantitative easing at the current £375bn. Inflation concerns will stay the committee's hand as the cost of living edges back towards 3 per cent in the months ahead.