Savers '˜face wait until 2020 for a UK rates rise'

Fears that the clouds hanging over the global economy will continue to darken has fuelled the pessimistic view that the cost of borrowing may not lift-off until 2020.

Money markets are also forecasting the 50/50 chance of a cut to the base rate, despite the Governor of the Bank of England’s recent assurances that the next move for UK interest rates was likely to be up.

But economists have struck a more positive note, forecasting that the central bank could raise rates as early as next year, on the back of rising wages and inflation.

The predictions come as the US central bank announced that it may delay future interest rate rises because of the gloomy global outlook exacerbated by a slowdown in China and the low oil price.

Analyst Danielle Haralambous, of The Economist Intelligence Unit, said the “vulnerability” of the UK economy has pushed back their prediction for a rise in the UK base rate.

She said: “We now expect the BoE to hold off on tightening for the next four years at least,” adding “the BoE is likely to delay policy tightening in 2019, largely on the basis of our forecasts that the US will experience a downturn in 2019 and rising levels of indebtedness in China will have become a greater source of risk by the end of our forecast period.”

Bank of England Governor Mark Carney offered a more positive forecast for interest rates when he delivered his quarterly inflation report last week stating that he expected the next move for interest rates would be a rise rather than a fall.

But all nine members of the Monetary Policy Committee (MPC) voted to keep rates on hold at 0.5%, where they have been since March 2009, in what marked the first unanimous vote since last July.

Since then global markets have become more volatile, with European indexes suffering torrid trading sessions in recent days, with investors taking flight from banking stocks amid fears another financial crisis could be looming.