Call to peg rates as shoppers retrench

The British Chambers of Commerce (BCC) urged the Bank of England yesterday not to raise interest rates again as its latest survey showed company sales and confidence had dipped.

The survey of 5,000 services and manufacturing companies also showed that manufacturers' exports had hit an eight-year high.

The balance of firms reporting increased sales over those reporting a fall fell to 14% for manufacturing and 23% for services in the January to March period. Both were the lowest scores since the middle of last year. Business confidence balances for both sectors dipped.

BCC director general David Frost said: "It is clear the economy is slowing and the business environment is becoming riskier and more difficult. The clamour for early interest rate increases is unjustified and potentially dangerous, particularly for manufacturing."

Higher interest rates would depress the very weak growth in consumer spending and may damage the housing market, said Mr Frost, urging the Bank of England not to consider another interest rate rise before August at the earliest.

Further evidence of a rapid slowing in consumer activity emerged yesterday from Ar gos, Austin Reed and Laura Ashley, all of which reported weakening same-store sales.

For Argos, a 1% dip in like-for-like sales for the first quarter of this year marked the end of a period of consistent growth stretching back to June 1999.

Tough trading was also reported by Austin Reed, where same-store sales at its eponymous shops fell from 11% in the year to January to 2% in the following 10 weeks.The group's Country Casuals womenswear brand showed same-store sales down 8% for the year.

Laura Ashley's same-store sales fell 8.5% for the year to January, with fashion sales sliding 29%. Like-for-like sales further declined 13.9% in the 10 weeks to April 9. Cost-cutting and higher margins nevertheless raised pre-tax profit by 55% to £4.8m.