Industry leaders will today make a last-ditch attempt to persuade the Bank of England not to implement the increase in interest rates that analysts are now certain will be delivered on Thursday.
The EEF, the manufacturers' lobby group, warned that a rise in borrowing costs would come in the face of a weakening global economy.
A quarter-point rise by the Banks' Monetary Policy Committee would take rates to 5 per cent for the first time since August 2001, delivering a fresh blow to homeowners and businesses.
The EEF said with employment at a record high and wage inflation under control, there was enough spare capacity in the economy to allow the MPC to wait and see the outcome of the new year pay round.
"The weight of evidence remains against a rise," Steve Radley, its chief economist, said. "While UK growth has been healthy, a slowdown in the international economy will sap its strength."
Oxford Economic Forecasting, an independent analyst, said a 5 per cent base rate would slow GDP growth to 2.3 per cent from this year's 2.6 per cent. "We are not forecasting economic meltdown with rates at 5 per cent, merely weaker growth than perhaps there needs to be," Adrian Cooper, its managing director, said. "Talk will shift early next year to rate cuts."
These types of arguments are likely to prompt David Blanchflower to vote for a freeze in rates as he has done in every month since he joined in June. But he is likely to be a tiny minority as two members - Tim Besley and Andrew Sentence - are likely to vote for a rate rise as they did last month. "A hike on Thursday looks a stone cold certainty," Howard Archer, chief UK economist at Global Insight, said.
There was fresh evidence of the need for a tightening of policy over the weekend after a report showing businesses' inflation expectations had risen sharply.
The inflation index in a quarterly business poll run by BDO Stoy Hayward rose close to a record high in October - to 105.4 from 102.5 in July. It said this pointed to inflation staying at 2.5 per cent - above the Bank's 2 per cent target - over the first quarter of next year.
Peter Hemington, a partner at BDO, said: "The impact of the expected November rate rise will test the resilience of the UK consumer. Business people in the service sector fear its impact."
Figures published last week showed the number of insolvencies hit a record high over the summer while the number of court actions for home repossessions hit its highest level for 14 years.
But for many economists the debate is whether rates will need to go above 5 per cent to curb inflationary pressures from rising import costs and a possible jump in wage deals in the new year.
Michael Saunders, a senior economist at Citigroup, said: "We expect the upcoming [quarterly] inflation report to signal that a further rise will probably be needed to keep inflation on target. The drop in consumer goods prices may be ending, and the MPC fears that pay deals will head higher."Reuse content