business chiefs in the south are hoping the Bank of England will cut interest rates tomorrow by a least a quarter of a per cent in a bid to boost trade.

The current UK interest rate of 3.75 per cent is at a 48-year low - spelling good news for borrowers but bad news for savers.

Catherine Wright, head of communications for the Southampton and Fareham Chamber of Commerce, which represents 2,000 businesses, said: "Any cut in the interest rate will be welcome and will certainly help."

But she said what was more pressing was the need by the government to signal whether Britain will convert to the euro, especially as interest rates abroad are so low as well. Ms Wright said: "We need to end that uncertainty. Businesses cannot plan or budget at the moment."

Economists warned that there was a strong argument for rate cuts, with manufacturers in Hampshire and the rest of the UK still under pressure from lower output and fewer orders.

The impact of the pound's recent weakness against the euro has also done little to give a major boost to flagging exporters or import prices.

David Pointer, a consultant from accountants Tenon, based at Chandler's Ford, said tomorrow's decision on whether to cut interest rates will be finely balanced between the need to increase consumer confidence with a cut and the stability required to protect the pound abroad.

He added: "In our view the vote to reduce the rate this month will be welcomed, not least by local businesses who badly need more support."

Meanwhile, new economic indicators currently show that the embattled manufacturing sector continues to languish while consumer confidence is propped up by the continued strength of the property market.

The UK's biggest mortgage lender, Halifax, said that the fundamentals underpinning the housing market remained, with low unemployment and low interest rates driving growth.

The average cost of a house nationally is £129,568, and an estimated £147,000 in Hampshire.