Britain set for interest rate rise

A further increase in British interest rates is on the cards after an influential City report said the cost of borrowing needed to increase to cool the housing market.

The Ernst & Young Item Club used its autumn forecast to press for a rise in rates to 5% next month to bring house prices back under control and calm inflation.

With inflation above its 2% target and expected to rise, the Bank of England is widely predicted to raise rates next month following an August increase.