Hopes for a fresh bout of money printing in the run up to Christmas are likely to be dashed today despite Britain’s powerhouse service sector running out of steam last month.
The majority of City analysts expect Bank of England officials to sit on their hands at the conclusion of December’s rate-setting meeting.
While the decision will provide further respite for borrowers, with interest rates tipped to remain at 0.5 per cent for at least another two years, there have been calls for the central bank to step up its programme of quantitative easing to help buoy the economy.
A raft of downbeat data in recent weeks has fuelled concerns that the UK could be heading for a so-called “triple-dip” recession following its bounceback over the summer.
The latest purchasing managers’ survey for the dominant service sector, published yesterday, showed that growth last month had slowed to its weakest pace in nearly two years as new orders fell.
The report’s main activity index, where any reading above 50 denotes growth, fell to 50.2 from October’s 50.6, confounding expectations for a rise to 51.1.
Vicky Redwood, chief UK economist at Capital Economics, said the survey suggested “the biggest part of the economy has completely fizzled out”.
The report spans a number of areas including business services, financial intermediation, hotels, restaurants and transport but excludes the retail sector. It follows disappointing surveys of manufacturing and construction.