A survey of leading economists has found that 65% believe that the Bank of England's Monetary Policy Committee will cut interest rates by another 0.25%, while 15% more say the Bank will cut by 0.50%.

Lande Abisgoun, of Idea, which carried out the survey, said:
"It looks very gloomy out there..in the short term we are looking for more bad news."

Sales start early

Christmas is the crucial selling season for many shops, with some companies generating up to 50% of their profits at that time. But this year retailers appear to have over-estimated consumer demand, and are believed to be carrying large stocks of goods.

Consumers, meanwhile, are determined to wait for bargains before spending this Christmas.

Marks and Spencer has denied that it will start its sale before Christmas, saying it will begin on 27 December. If it were to launch a sale early, many analysts think there would be a bloodbath on the high street.

Nick Bubb of SG Securities, said:
"Shoppers have got the message they can afford to wait. Unfortunately, many retailers can't."

Pressure for rate cuts

The co-ordinated cuts in interest rates across Europe last week have added to pressure for the Bank of England to act. European interest rates are now 3%, and in real terms, taking into account inflation, they are only 2%.

Robin Aspinall, an economist at National Australia bank, believes that those cuts "make the UK's interest rate level look still more absurd". He says that UK rates would need to fall below to 5% to bring them in line with Europe in real terms.

But there are worries that even further interest rate cuts may not be enough to avoid a recession.

Clive Vaughn of Verdict Research says: "A rate cut may take the foot off the brake but it will not make much difference because there is no forward momentum."