The Bank of England is due to give its latest verdict on interest rates as inflation concerns vie with fears over a double-dip recession among its policymakers. The Monetary Policy Committee's (MPC) Andrew Sentance voted to hike rates last month to tackle inflation, although fellow members have warned it is too early to act with the recovery still fragile.

The MPC's leading "hawk" is set to stick to his guns this month, although the wider committee should vote to hold rates at a record-low 0.5% and quantitative easing unchanged at £200 billion. Mr Sentance believes there are enough recovery signs in the economy to absorb a rate hike, but recent survey data has flagged up slowing growth among manufacturers and services firms.

The impact of Chancellor George Osborne's emergency Budget clampdown will also be felt in swingeing spending cuts and tax hikes to address the deficit and MPC member Adam Posen has said he had been kept awake at night by the risks of slashing too swiftly.

MPC member David Miles has said inflation - above the Bank's 2% target since last November and currently at 3.4% - was "uncomfortably high" but also believes it is too early to move.

The slew of disappointing economic data has not been confined to the UK, with worries over slowing growth in China adding to recent stock market falls and increasing fears of a double-dip.

The Bank's own credit conditions survey last week warned of a second credit crunch, with mortgage availability expected to worsen during the third quarter of the year as lenders find it harder to raise funds.

The housing market stalled during June, according to building society Nationwide - creeping just 0.1% ahead over the month as more properties come up for sale. High street retail sales could also come under pressure once the positive impact of the World Cup fades. Investec chief economist Philip Shaw does not expect a return to recession and said markets had been "panicking" in recent weeks.