The Bank of England sounded a note of caution over the future of growth in the UK as it kept interest rates at a record low level for the sixth quarter in a row.
As expected, the Monetary Policy Committee voted to hold interest rates at 0.5 per cent, where they have been placed since March 2009. They also decided to leave their programme to boost the money supply unchanged at £200 billion.
Although the UK economy has returned to growth, with an estimated 1.1 per cent expansion between April and June, growth is expected to fade in the second half of the year as public sector cuts hit the wider economy.
Mark Smith, the regional chairman at PricewaterhouseCoopers in the Midlands, said the decision had not come as a surprise.
He added: "Despite the 1.1 per cent surge in GDP growth in the second quarter of the year, Governor King believes a sustained recovery remains uncertain and there is still ‘some distance to travel’ before interest rates come back to typical levels.
"Policymakers are likely to keep interest rates at their current record low and continue to prioritise growth for some months yet. There is also a possibility of more quantitative easing further down the line, which will further reassure Midlands businesses and consumers, as they begin to come to terms with the likely impact of the government’s austerity measures.