BCC warns rates rise could threaten economic recovery

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BCC warns rates rise could threaten economic recovery

LONDON, UK - The BCC has warned that the proposed interest rate rise could potentially crush the recent economic recovery in Britain, despite a new survey which reflects strong economic performance throughout 2003.

According to the British Chambers of Commerce quarterly survey, domestic sales, exports and investment intentions all improved in the last three months of 2003.

While the improvement was led by service sector firms, manufacturers also reported taking on more workers to deal with higher exports and home sales.

The BCC reported a four-year high for manufacturer export sales, and domestic orders at their highest level since the start of 2001, when the world economy started slowing down.

David Kern, the BCC's economic adviser, told The Guardian: "I cannot remember a survey so positive."

The positive image portrayed by the BCC could add further reason for the Bank of England to raise rates, according to analysts.

However, the BCC argue that the improvements should be allowed to flourish, not be pushed back down again by a rate rise.

David Frost, the BCC's director general, argued: "There are green shoots in this recovery, but let those shoots flourish before stamping down on inflation. The MPC must not raise interest rates prematurely."

Claiming the economy is too reliant on public spending, the BCC explained that something like a rate rise could have a huge hit on manufacturing which is still weak and vulnerable to rates and taxes.

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