Business leaders in Birmingham warned that every effort must be made to avoid a double dip recession following the decision by the Bank of England to keep interest rates at an historic low of 0.5 per cent.

The bank of England’s Monetary Policy Committee also resisted pumping more money into the economy through quantitative easing following higher-than-expected third quarter GDP growth of 0.8 per cent.

Although there is likely to have been another three-way split in the nine-strong Monetary Policy Committee (MPC), economists suspect recent better-than-expected economic data steadied the hands of those in the no-change camp.

Katie Teasdale, head of policy at Birmingham Chamber of Commerce Group, said: “We welcome the stability but a further increase in quantitative easing must be under consideration. However, the Bank’s decision is understandable following GDP growth and upbeat manufacturing data.

“The impact of the government’s spending cuts to reduce the deficit will undoubtedly have a big impact on the private sector. So great care must be taken to ensure that the recovery is not damaged.”

Mark Smith, regional chairman at PwC in the Midlands, added: “While mixed signals on the UK economy are making the job of the committee increasingly difficult, the decision to keep both interest rates and quantitative easing on hold was still expected.

“There were some calls at October’s meeting for quantitative easing to be increased but last week’s surprise GDP figures show the economy is moving ahead faster than expected and this is likely to delay any further stimulus until the New Year.

“Midlands businesses will be heartened by the fact that economic growth is not as weak as was expected, but many are still concerned about the potential impact of the government spending review and will welcome the news that further quantitative easing will be undertaken if necessary.”

Analysts suspect the Bank will reveal a second quantitative easing package early next year - possibly injecting a further £50 billion on top of the existing £200 billion - as the country starts to feels the pain of austerity measures.

The MPC has not changed rates for 19 months in a row, while it last increased QE 12 months ago, when it upped the programme by £25 billion.

Minutes of last month’s MPC meeting showed that one member - Adam Posen - called for a £50 billion hike in QE, while Andrew Sentance maintained his vote for a rate hike to 0.75 per cent to calm inflation.