The coalition Government has pledged to cut the country's budget deficit, currently at almost 11pc of GDP, at a "significantly accelerated" pace – starting with £6bn of cuts this year – and most analysts expect no change in monetary policy until the end of this year at the earliest as the central bank seeks to asses the fall-out from the Budget on June 22 and from the eurozone debt crisis.

The Monetary Policy Committee also maintained the Bank's bond holdings of £200bn, having put its quantitative easing programme on hold four months ago. A rise in inflation to 3.7pc, almost double the Bank's 2pc target, has triggered concern among some policymakers over price pressures and economists see a small chance of a rate rise before the end of this year.

However, the fear is that the size of Budget cuts needed could derail the fragile economic recovery and plunge the nation back into a slump after it emerged from its worst recession on record last year. GDP rose 0.3pc in the first quarter, slower than the 0.4pc pace recorded in the prior three months.