UK businesses expect zero growth

British businesses do not expect any growth over the next three months, as a surging cost of living squeezes consumer demand, a monthly survey showed on Sunday.

The Confederation of British Industry (CBI) said members reported above-average growth in the three months to the end of July - slightly faster than in the three months to June - but expect this to peter out in the months ahead.

“As firms and consumers continue to be buffeted by rising prices, private-sector activity has slowed to a near standstill,” CBI economist Alpesh Paleja said.

The Bank of England is widely expected to announce its biggest interest rate rise since 1995 on Thursday, raising rates to 1.75per cent from 1.25per cent to tame inflation that is already at a 40-year high of 9.4per cent.

However, the BoE has warned that Britain’s economy is likely to contract later this year, when a 40per cent jump in regulated energy tariffs hits consumers in October, and has forecast the economy will contract slightly next year.