Andy Bruce

Large British companies expect inflation and interest rates to rise over the next year and are focussing increasingly ​on cost-cutting, a survey published Deloitte showed on ‌Wednesday, two weeks before finance minister John Healey's first budget.

Bank of ​England interest rate-setter Catherine Mann said the central bank made errors in how it framed its policy response ‌to the shock from the Middle East war, and that has pushed up borrowing costs in the UK in ways that should be of no comfort to officials.

Bank of England ​Governor Andrew Bailey said on Friday that persistently high energy prices would make it harder for the ‌central bank to leave interest rates on hold, underlining a recent shift in tone towards higher borrowing costs.

British retailers this month reported the biggest drop in sales since April and they ​cut orders with their suppliers by the ‌most since records began in 1983, a Confederation of British Industry survey showed on Thursday.

Bank of England Deputy Governor Clare Lombardelli said on Thursday that interest rates will likely have to rise if energy ​prices stay elevated, unless there is clear evidence of a weaker economy.

Growth in British business activity cooled this month and inflation pressure built, a survey showed on Wednesday, an awkward backdrop for finance minister John ​Healey ahead of his first budget next month.

Bank of England Governor Andrew Bailey said on Thursday the outlook was too unpredictable when asked ​whether markets were right to price in almost ‌four interest rate hikes over the next year, adding that his officials had not discussed that.

The Bank of England kept interest rates on hold on Thursday but ​warned they might have to go up if the Iran war drags on, while predicting British inflation will top 4% early next year.

England's mayors should be funded from taxes raised in their own regions rather than government grants, with safeguards so poorer areas do not lose out, ​a think tank said on Wednesday as ministers ready plans to shift ‌power from London.

The Bank of England looks set to keep interest rates on hold on Thursday but investors are watching for any hint that surging energy prices could force it to follow the example of the U.S. Federal Reserve which raised borrowing costs a day earlier.