LONDON (Reuters) - The Bank of England is walking a tightrope. It needs to raise interest rates high enough to clamp down on inflation but without tipping debt-laden consumers over the edge.Its decision to lift rates to a six-year high of 5.75 percent — its fifth rise in under a year — came as little surprise yesterday. The economy is growing strongly, capacity constraints are more evident and price pressures remain strong.

But with the impact of recent rate rises yet to be fully felt there is growing concern the Bank may be heading into overdrive.

"British business has shown resilience so far in the face of higher interest rates, but the pain is set to increase rapidly from now onwards," said David Kern, economic adviser at the British Chambers of Commerce. Economists reckon it takes more than a year for higher borrowing costs to work their way through the system and the recent popularity of fixed-rate mortgages means this time-lag could even be longer.

A large number of Britons took out fixed-rate mortgages after August 2005 when official rates fell to 4.5 percent. More than two million such deals are due to expire over the coming year or so, leaving borrowers feeling the impact of five interest rate hikes in one go.

"I'm fairly upset," said Kelly Soliss, a florist from Southend. "My mortgage goes up and we can just about cope with it now." Someone with a $100,000 mortgage coming off a two-year fixed rate deal in the next few months will face a rise in their monthly payments of around $100 ($202), according to the Royal Institute of Chartered Surveyors.

With Britons sitting on a record $1.3 trillion debt pile, disposable incomes falling and people saving less of their income than at any time in almost half a century, this could cause considerable pain.

The Council of Mortgage Lenders calculates that British homeowners are already spending more of their income on mortgage payments than at any time in the last 15 years.

So could this be the straw that breaks the camel's back?

There is plenty to suggest Britain's economy can withstand higher borrowing costs. House prices are rising at double-digit rates, unemployment is low and corporate profitability remains at record highs.

But housing equity withdrawal figures suggest consumer spending has only held up because people have borrowed against the rising value of their homes. If the housing market turns down, it may not take long for the economy to follow.

Britain's biggest retailer Tesco Plc has already warned the Bank of England not to "overdose" on interest rate rises and Kevin Hawkins, director general at the British Retail Consortium, said even this week's rise could be one hike too far.

"With disposable income growth at record lows, saving slumping and customers struggling to meet rising household bills, the squeeze is tightening," he said.

Money markets show investors expect interest rates to rise to six percent before the end of the year.

"I'm mortified because we only changed our mortgage to variable rate about four months ago," said civil servant Pepita Simpson. "God only knows what it will go up to."