West Midlands manufacturers have demanded a cut in interest rates to help them cope with soaring oil prices.

In a survey of its members by Birmingham Chamber of Commerce and Industry, 88 per cent of respondents said pressure from strong oil prices was now having a marked effect on their business.

Companies, particularly in the manufacturing sector, said the cost of transport and freight, raw materials and heating in factories and offices had gone up noticeably.

Over 70 per cent said they were already passing on higher costs by increasing retail prices but 29 per cent said they were either unable to do so because of competition from cheaper imports or that they would lose customers if they did so. Some companies are not able to put up prices until their next review which suggests a knock-on effect next year when contracts are renegotiated.

Charlotte Ritchie, policy executive at the chamber, said: "It is likely that this situation will begin to affect business confidence, which could be a disaster for the struggling manufacturers in the West Midlands.

"It could also negate any benefit companies were experiencing as a result of last month's rate cut.

"Chamber members feel that another cut this month is necessary to boost confidence and encourage companies to invest in buildings and machinery."