The Bank of England is in danger of pushing the country into recession, business and retail leaders have warned.

They spoke out after the Bank's monetary policy committee today left interest rates untouched at 5%.

"The economy urgently needs an interest rate cut to counter threats of recession," said David Kern of the British Chambers of Commerce. The MPC cannot ignore the dangerous effects of rising insolvencies, falling house prices and worsening pressures on the banking system."

Retailers joined the attack. "Major retailers are telling the Bank weakening sales and record low consumer confidence show the downturn is deepening," said Stephen Robertson, director general of the British Retail Consortium.

"To avoid turning the slowdown into a slump, as soon as conditions allow the next rate move should be down."

The Bank declined to comment. Most economists say it is hamstrung in that it cannot cut rates while inflation - way over target at 3.8% in June - is running out of control.

Today's decision is likely to have been swayed by the Bank of England's's key quarterly Inflation Report, to be published next week. It will outline where the Bank thinks the cost of living - ravaged by soaring fuel and food prices - is going.

"The slowdown in UK economic activity is gathering pace and business and consumer confidence is falling further," said CBI director general Richard Lambert. "However, with inflation heading higher in the next couple of months, the Bank is right to leave rates on hold for the time being."

Latest figures show house prices fell 11% in the last year, the sharpest drop since the recession of the early 1990s.

Figures from top mortgage lender Halifax show house values in July slid 1.7% month-on-month, after falls of 1.9% in June and 2.5% in May. Figures from motor dealers show new car sales are down by 13% and private car sales off by nearly 17%.