The Bank of England has kept interest rates at a record low of 0.5 per cent, judging that the economic recovery remains too weak to sustain an inflationary spiral.

Inflation has surged to 4 per cent, twice the central bank’s target, but the economy faces headwinds from public spending cuts and suffered a surprise contraction at the end of last year. Some bank policy-makers have indicated they want to see how the economy performs in the first quarter. The European Central Bank, facing lower inflation in the euro zone than in the UK, has signalled a rate rise is imminent.