A rise in interest rates could spell trouble for UK manufacturing and the housing industry, according to timber and construction industry groups.

Richard Lambert, director of the British Woodworking Federation (BWF), responding to the rate rise call by the Council of Mortgage Lenders, says the Bank of England is rightly being cautious in its approach.

He said: “There is a tendency to be obsessive with house prices and the housing market and to assume interest rates are the best or only way of dealing with it. But if you lift interest rates it affects much more.

“It might have a beneficial impact on one area of the economy but it could have a disastrous affect in others. It could push the wider economy into a recession and that would have a devastating affect on the housing market.”

Mr Lambert said the situation for many BWF-member companies was “finely balanced”, with a lot of hard work going on to secure contracts.

Meanwhile, the Construction Products Association (CPA) warns a rate rise will impact UK manufacturing. CPA economics director Allan Wilén said: “We cannot allow housing to become a brake on economic growth”.