Consumer confidence remains fragile and the outlook is gloomy, the country's biggest building society said yesterday.
In its regular monthly survey, the Nationwide said sentiment fell in February, erasing the modest gain seen the previous month.
It came as today the Bank of England Monetary Policy Committee announces its latest monthly interest rate decision.
Ronnie Bowker, board member of lobby group Birmingham Forward and regional senior partner at accountants Ernst & Young, urged a cut "in order to kick start the economy".
M ost pundits expect another no change decision, and Mr Bowker admitted the economy was giving out mixed signals, with house prices appearing to be on the rise while the manufacturing and retail sectors were still finding conditions tough.
But he cautioned: "These factors are magnified in the Midlands."
Saying the problems at van maker LDV, the troubles at Eliza Tinsley and the threat to jobs at Jaguar were compounding the downward pressure on the local economy, he stated: "The MPC needs to take action in the coming months if it is to ease some of the negative pressures that are building and avert a full scale recession."
Nationwide's headline index now stands at 94 from 98 in January and 110 in February 2005. The index has now dropped for nine of the past 12 months.
"It is difficult to take any comfort from the latest figures. Bad news on jobs, retail sales, rising fuel and energy prices have all combined to undermine consumers' confidence," said Nationwide executive director, Stuart Bernau.
The outlook was gloomy and could continue into the spring, he added.
Retailers are continuing to slash prices in an attempt to lure buyers back into the shops, the British Retail Consortium said.
The BRC said its monthly shop price index revealed overall prices were 0.67 per cent lower in February than a year ago.
On a month-on-month basis, they were 0.1 per cent down.
"These results reaffirm what we saw last month, that retail price deflation is back with a vengeance," said BRC director general Kevin Hawkins, adding that prices were lower during February than in the sales and discounting of January.
The decline in prices was driven by a 0.48 per cent fall in non-food items, particularly clothes and furniture, while food prices increased by 0.70 per cent.
And the MPC need not be worried about wage inflation which showed signs of easing in February, while jobs growth slowed to a two-and-a-half year low, a further survey found.
The monthly Report on Jobs by the Recruitment & Employment Confederation and accountants KPMG found that although average wages continued to rise last month, pay inflation was weaker than in January.
The number of people placed in permanent jobs rose at the slowest rate in 31 months, while temporary staff billings increase at their weakest rate in five months.