"Tougher years ahead", EY Item Club to predict

There are "tougher years ahead" for the UK economy, a quarterly report due out on Monday is expected to say.

The EY Item Club is set to predict a slowdown in consumer spending will prevent the Bank of England from raising interest rates until the Autumn of next year.

"Consumers should continue to make hay on the back of low inflation until Winter," EY Item's chief economic adviser Peter Spencer is due to say.

"But as prices start to pick up and the budget squeeze begins to take effect next April, consumers will feel it in their pockets and spending growth will inevitably slow."

However, according to the Sunday Times, the leading forecaster does anticipate a rise in wages, which it said would encourage businesses to invest, driving productivity higher and preventing a significant rise in inflation.

Data out on Wednesday is set to show that average weekly earnings rose from 2.9% to 3.0% in the three-month period ended August.