HOMEOWNERS and manufacturers breathed a sigh of relief yesterday as interest rates were held at 3.5 per cent.

Poor trade figures may have influenced the decision by the Bank of England's Monetary Policy Committee.

The UK trade deficit in goods and services widened to £2.8bn in August, after a deteriorating picture for business with European Union countries.

Exports to EU countries fell more than eight per cent in August, the Office for National Statistics said, as economic gloom continued to hit demand from the continent.

That pushed the EU trade deficit to £2bn. The gap with non-EU nations is lower, in this case at £1.6bn.

The gloomy trade data came on top of figures earlier in the week showing a surprise fall in manufacturing production.