The Bank of England will have to keep interest rates at their record low of 0.5% until 2014, a leading economic forecaster has predicted. The Ernst & Young Item Club said rates would need to be kept low to counter-balance the government's spending cuts. Interest rates have stood at 0.5% since March 2009. Professor Peter Spencer, from the Item Club, said: "A base rate of 0.5% will begin to look like the new normal. "The new coalition's plans to cut the deficit are certainly ambitious. "On the assumption that the government is able to implement the overall reduction of £40bn set out in the Budget, we expect that UK growth will struggle to reach 1% this year but will gradually speed up in the following years to give the UK a high-quality recovery based on trade and investment." The Office for Budget Responsibility (OBR) has said that it expects rates to start to rise next year. The Item Club believes the Consumer Prices Index (CPI) measure of inflation will stay above the Bank of England's 2% target over the next 18 months, helped by high energy prices and increases in VAT.