Britain's beleaguered manufacturing sector was dealt a further blow yesterday when a home rates freeze and European rates slash conspired to make exporting more difficult.

The Bank of England held its rates at four per cent for the 13th month in a row while the European Central Bank broke its year-long habit by cutting its key interest rate from 3.25 per cent to 2.75 per cent.

The Euro bank's 18-member policy council, meeting in Frankfurt, threw Germany's flagging economy a much-needed lifeline but the move will do nothing to aid industry in this country.

A cut in interest rates was never really on the cards in Britain as the housing sector continues to grow at an alarming rate and consumer spending shows no signs of letting up.

Analysts yesterday suggested that the next move in rates by the Bank of England monetary policy committee was more likely to be up than down.

Despite the apparent problems faced by British industry looking to trade abroad, Ian McCafferty, chief economist at the CBI, said stimulating Europe's economy would have a positive impact on demand for British exports.

He said: "The decision by the ECB is good news which should help stimulate global growth."

He added: "In the face of so much uncertainty, the Bank (of England)'s wait-and-see policy is right for business for now.

"Lower interest rates at this stage would risk further stoking the housing market, further unbalancing the economy and threatening greater economic volatility next year."

But the Bank of England faced condemnation from Amicus General Secretary Roger Lyons, who said: "The announcement of no change in the interest rate will mean thousands more jobs lost in manufacturing export sectors with Christmas less than a month away."