The Ernst & Young Item Club has urged the Bank of England not to raise the base rate saying the hike could have adverse effect on the market. The figures of the forecasting group have revealed that the economy of the country has grown by just 1.8% because of the high inflation rates.

Peter Spencer, Chief Economic Advisor to the Item Club believes that an increase in the base rate is likely to add to the intense pressure on UK consumers. It will increase the retail prices index and wage policies will also suffer. The economists believe that the Monetary Policy Committee (MPC) should keep the rate at its current record low of 0.5% until November this year.

The club suggests that major companies of the country need to take appropriate actions so that the economy could be brought back on track. The survey has appealed the firms to assist recovery by spending more and predicts that the business investment will increase 12% this year and 14% in 2012. Mr. Spencer said that the economy of the nation is expected to be quite stronger next year because the inflation rate will fall.