There must be no rise in interest rates if the recovery is to be
sustained, according to the Institute of Directors.
And John Rider, West Midlands regional chairman, warned of a
potential double hit - a rates increase could cost existing jobs
while slow growth would delay the creation of new ones.
He said he was "very concerned" that three out of the nine Bank
of England Monetary Policy Committee members were now in favour of
a rates jump which, were it to take place, would be "deeply
damaging".
He charged: "With the economic cuts, higher VAT and National
Insurance, public sector job losses and oil price mayhem this is
not the time to be considering monetary tightening.
"I strongly urge the MPC to keep their nerve."
In its latest UK economic outlook the IOD predicts GDP growth
will be just 1.2 per cent in 2011, unchanged from its previous
quarterly forecast in November.
Growth is in particular being hit by falling household income,
the result of a "pincer movement" from higher inflation and higher
taxes.
However, the IOD does not think the Chancellor needs to resort
to a Plan B.
Mr Rider stated: "We believe that if the Chancellor was to slow
the reduction in public spending, it would be more damaging to GDP
growth than maintaining the current course.
"Raising interest rates could undermine recovery and risks a
double-dip recession.
"The MPC should avoid this at all costs; indeed there is a case
for an extension in Quantitative Easing."