The Bank of England held interest rates at a record low of 0.5pc, despite increasing inflationary pressures. This comes as a result of concern that pushing rates up too soon could stifle the recovery.

Of the 62 economists polled by Reuters, none expected the Bank to raise rates today, and the Bank has not indicated it is considering an imminent change in the rate from 0.5pc, where it has remained March 2009.

However increases in food and oil prices are pushing up household bills, and the increase in VAT to 20pc is also expected to drive up inflation, which was running at 3pc in 2010. It could go to 4pc in the coming months.

That is above the Bank of England's goal of 2pc.

However government spending cuts will take hold in the coming months, which are expected to be a brake on growth, and the services sector is still weak.