The Bank of England needs to cut interest rates in the near future in order to prevent the UK economy falling into a major recession, the British Chambers of Commerce (BCC) has warned.

Coming just days before the Bank's monetary policy committee (MPC) meets to decide September's base rate development, business leaders have argued that such a cut is imperative if the economy is to be given a much-needed boost.

This is in spite of many economists arguing that further freezes are necessary so as to help curb inflation, which remains far above the Treasury's targets.

"We understand the MPC's concern over inflation," David Kern, economic adviser to the BCC, told the Daily Telegraph.

"But the MPC's own analysis suggests that inflation will peak in the next two to three months, and will fall sharply next year. To reduce the threat of a severe economic downturn, the MPC must start cutting interest rates in October or November."

Also ahead of the MPC meeting, the Engineering Employers Federation has called on the government to take steps to ensure that UK businesses are sufficiently equipped to survive the economic downturn.