British Chambers of Commerce warns against 'hasty' rate rise

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The Bank of England should not make any "hasty decisions" on raising interest rates, warns the British Chambers of Commerce (BCC).

In its quarterly survey it says an early rate rise "may mean more limited growth ambitions" among companies.

The survey of 7,000 businesses showed that the growth rate had slowed in some industries between April and June.

The BCC said this was "unsurprising" given that the economy had "jolted forward" in the first quarter of 2014.

According to the survey, the rate of growth slowed in exports and investments in the second quarter, although they are still both above their pre-recession levels.

The index measuring the service sector, the biggest part of the UK economy, slipped from the all-time high reached in the first quarter.

Driving recovery

The BCC, a business lobby group, said the recovery was "moving forward" but warned that "repairing our broken business finance system" was "a top priority".

"These results reinforce the case against the Bank of England making hasty decisions on raising interest rates in the very short term," said John Longworth, director general of the BCC.

"By driving up the cost of credit for fast-growing firms, many of whom do not sit on the same healthy cash piles as their more established counterparts, early rate rises may mean more limited growth ambitions among the very firms we are counting on to drive the recovery," he added.

The Bank of England governor Mark Carney has been accused of giving mixed messages about when rates would rise.

Last month he hinted that interest rates could rise as soon as this year. He said in a speech that an increase "could happen sooner than markets currently expect", which at the time was the beginning of 2015.

However the following week he appeared to row back from that.

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