BUSINESS leaders have called for interest rates not to rise this week at the same time as a leading High Street bank revealed consumers fear they will do just that.

The Chamber of Commerce Herefordshire and Worcestershire said it hoped the Bank of England would not put up interest rates because it would have an adverse impact on exchange rates, which are the biggest cause of concern for manufacturers in the two counties.

In the latest Quarterly Economic Survey compiled by the Chamber, 30 per cent of manufacturers in Worcestershire and Herefordshire said exchange rates were their biggest external worry, compared with 15 per cent that felt interest rates were the major threat.

Christopher Harvey, head of policy and representation at the Herefordshire and Worcestershire Chamber of Commerce, said he hoped interest rates would hold steady.

"Any movement in the Bank of England base rate has an impact on the exchange rate and, as far as our members are concerned, interest rates should hold or fall as there is no case for a rise at all.

"In making their decision the Bank's monetary policy committee must take account of the impact on the economy as a whole."

Business leaders say interest and exchange rates are a cause for concern, particularly with retailers expected to announce gloomy sales results from over the Christmas period.

LloydsTSB bank has issued its monthly consumer confidence barometer showing that most people (69 per cent) still expect further interest rate increases.

Trevor Williams, the bank's financial markets economist, said this came despite the current market view that interest rates had peaked at 4.75 per cent.

"This current level of pessimism among consumers suggests that if rates undershoot expectation and don't rise, consumer confidence and consumer spending could both strengthen and lead to faster economic growth than is currently expected."

Within Herefordshire and Worcestershire, the Chamber of Commerce's survey has shown confidence among manufacturers is also strengthening with 75 per cent expecting to see an increase in their turnover in the first quarter of 2005 and 66 per cent expecting an increase in profitability.

n Chris Harvey, head of policy and representation at the Chamber of Commerce Herefordshire and Worcestershire, says business leaders in the two counties want interest rates reduced.