The Bank of England is expected to keep interest rates unchanged on Thursday amid hopes of an 11th hour Brexit deal and signs the economy is holding up in the face of a second wave of the pandemic.

Economists predict the Bank will sit tight at its final meeting of the year, holding rates at 0.1% and keeping its quantitative easing (QE) programme at £895 billion after unleashing another £150 billion last month.

It comes as recent data has pointed to a resilient performance from the economy during the second lockdown across England, with signs the hit will be far less severe than in the spring.

There is also a glimmer of hope that a Brexit deal may still be within touching distance after the UK and EU agreed to extend trade talks and averted a collapse on Sunday.

But policymakers will be watching the Brexit talks intently and economists say the Bank could launch emergency action before its next meeting in February if a deal is not reached.

Howard Archer, chief economic advisor to the EY Item Club, said: “The Bank of England looks highly unlikely to be handing out any early Christmas presents to the UK economy in the form of further stimulus on December 17.

“Having provided more monetary stimulus in November and with the economy seemingly showing considerable resilience in the face of the recent English lockdown and other restrictions, it is unlikely the Bank of England will act in the near term at least.”

There has also been the arrival of a Covid-19 vaccine in the UK since the Monetary Policy Committee (MPC) last met, which has boosted the outlook for 2021.

“Obviously, there is a long way to go, but the significant recent progress concerning the vaccine does seemingly have positive implications for the economy,” said Mr Archer.

Data on Wednesday signalled the UK economy returned to marginal growth this month after the second lockdown ended, which is expected to soften the fourth quarter blow.

The closely followed IHS Markit/CIPS Flash UK Composite purchasing managers index (PMI) showed a reading of 50.7 so far this month, up from the 49 final result for November. Anything above 50 indicates growth.

But while manufacturing firms were helped by stockpiling ahead of the year-end Brexit deadline, the survey showed ports disruption hit factory supply and hospitality firms remain under severe pressure.

James Smith, developed markets economist at ING, said it is now forecasting a fourth quarter fall of around 1% – a far cry from the record 19.8% plunge in the second quarter after the spring lockdown.

However, he warned over the economic prospects of a no-deal and the disruption already being seen at ports, which will “add an extra winter economic challenge”.

The outcome of Brexit talks will also focus attention on the prospect of negative rates for the first time in the UK.

The Bank is assessing whether it can take rates below zero for the first time in the UK but has yet to report back.

Bank bosses also highlighted the challenges of such a move earlier this week, with Santander telling MPs it could take 18 months to adapt its legacy systems to negative rates.