Despite the U.K. Treasury’s official view that the U.K. will start raising interest rates next year, Ernst & Young’s ITEM Club economic forecasting unit thinks otherwise.

They don’t think the government will be able to increase interest rates past 0.5% for the next three years…

“Monetary policy [will have to] remain very loose in order to offset the dampening effects of fiscal policy. Further asset purchases cannot be ruled out if there are signs that the recovery is relapsing.”

~Peter Spencer, ITEM’s chief economic adviser (Telegraph)

But that doesn’t mean they don’t sympathise with the coalition’s position:

“As Mrs Thatcher famously said in 1976, ‘Socialist governments… always run out of other people’s money’. Of course, that’s exactly what happened under Mr Brown. Now, the coalition government is picking up the pieces.”