Small and medium-sized business owners have been warned that BT staff are preparing for industrial action.

The Communication Workers Union (CWU) is expected to announce plans later today for a ballot over a strike.

The CWU, which represents 55,000 staff and is BT's biggest union, is asking for higher pay. Following a pay freeze last year, BT is offering an increase of 2% in pensionable pay with a guaranteed bonus. The CWU is seeking a 5% rise.

The union is expected to announce the ballot at its annual meeting to be held in Bournemouth later. If strike action went ahead it would be the first at BT since 1985, a year after the company was privatised.