The Bank of England won't raise interest rates from a record low until the fourth quarter of next year, according to a majority of 62 analysts polled by Reuters, though several say it could come sooner.

The survey, taken Dec 18-22, found economists almost unanimous in expecting the BoE to leave its quantitative easing bond purchase programme, first launched in March this year, at the most recent cap of 200 billion pounds.

The vast majority of analysts do not expect any more such purchases now that it is very likely the economy grew in the last three months of this year, ending the longest recession since the second World War.

Many are now optimistic that Britain, the only major Western economy other than Spain that did not grow in the third quarter, has better prospects ahead. Data on Tuesday showed UK gross domestic product was revised up, although by less than expected, to show a 0.2 percent contraction in Q3.

The latest Reuters interest rate poll found economists expecting the Bank Rate to climb to 1 percent in the fourth quarter of 2010 and rise to 2.0 percent by mid-2011, from the current record low of 0.50 percent.

"With household debt still very high, credit constrained and a fiscal squeeze looming, the economy still has a lot to contend with," said Jonathan Loynes, chief European economist at Capital Economics, who expects just 1 percent GDP growth in 2010.

That is roughly in line with a separate Reuters poll taken earlier this month which showed a consensus of just 1.1 percent growth next year based on forecasts from 41 economists.

Economists were generally complimentary of the BoE's zero interest rate and quantitative easing policy, scoring them a 7 out of 10 with grades ranging from 4 to 9.

Nearly half say hike by Q3

Twenty-seven of 60 economists expect a rate hike by the third quarter, down slightly from 28 of 59 in the last Reuters UK interest rate poll.

And 47 of 60 are forecasting at least one 25 basis point hike by end-Q4, compared with 46 of 59 in the poll taken three weeks ago. The number of economists looking for an early hike also edged up -- six say before June compared with five in the last Reuters poll.

Economists at Goldman Sachs have one of the most aggressive views, expecting rates to rise to 1.50 percent by mid-2010 and hit 2.50 percent by end-year and 3.50 percent by end-June 2011. That is all the more surprising given they expect U.S. interest rates to remain at near-zero through to end of 2011.

"The recovery is likely to be led by investment and net exports, facilitated by better global growth and the weakness in sterling,"

Goldman said in a recent note. "We expect household and government consumption to remain weak."

Budget woes ahead

Indeed, sharp cuts to government spending in the coming fiscal year to rein in a staggering budget deficit set to hit nearly 13 percent of GDP are almost certain, no matter who wins an election set for early 2010, the Conservatives or the ruling Labour party.

And the MPC is likely to continue erring on the side of overstimulating the economy given it has no traditional policy options left to get the economy going again if it stumbles.

The strength of retail sales over the Christmas shopping season, full details of which won't be known until well into 2010, will be a key gauge of how well the battered and typically heavily-indebted British consumer will hold up.

But official figures are pointing to an end to the rot in the labour market, or at least a stabilisation, after shedding nearly a million jobs since plunging into recession last year.

Minutes of the MPC's December meeting, when it voted to hold its QE programme at 200 billion sterling but said it would keep the scale under review, could shift interest rate sentiment when they are released on Wednesday.

But few expect policymakers to kick start stimulus yet again just as other major central banks like the European Central Bank and the U.S. Federal Reserve are contemplating how they will exit super-easy monetary policy.