West Midlands business leaders are calling on Bank of England policymakers to encourage more bank lending and free up cash.

The Bank is this week expected to announce another £25 billion boost for its programme to increase money supply and tackle recession at the Monetary Policy Committee (MPC) meeting tomorrow.

They are widely forecasted to leave interest rates on hold at their historic low of 0.5 per cent for the fourth month in a row, but experts are braced for a further expansion of the quantitative easing (QE) programme.

Bridget Blow, president of Birmingham Chamber of Commerce, said she was expecting rates to remain the same.

She added: “We fully expect the Bank of England to focus on its programme to stimulate the economy with injections of new money, although there is no firm evidence yet that quantitative easing is having the desired effect of significantly stimulating lending and growth.

“The economy remains in a fragile condition and is not poised for a recovery. Sales and order figures remain historically low and a subdued outlook continues to be depicted in the labour market.

“To this end, it is vital that the Government encourages the banks in their lending in an attempt to revitalise the economy.”

It is widely thought the Bank will increase the QE purchases of gilts and other assets to £150 billion – the upper limit set by the Treasury.

But it is unclear whether the Bank will seek permission to extend the limit from the Treasury, which indemnifies the Bank against losses on the scheme.

There has been encouraging data suggesting the worst of the recession may be over, with recent sector surveys giving hope of a recovery by the end of the year and house prices rising in the West Midlands for two consecutive months.

However, the Bank’s own credit conditions report last week confirmed lending is still tight, despite the QE efforts so far since March.

Louise Bennett, chief executive of the Coventry and Warwickshire Chamber of Commerce, said many businesses were still not feeling the benefit of record low interest rates.

Ms Bennett said recent figures from a Chamber survey suggested that local industry was still missing out. She expects interest rates to remain at 0.5 per cent.

She said: “Our survey told us that businesses in the region are still struggling to access finance so, therefore, the interest rate is redundant in helping those companies. I would be very, very surprised if rates moved on Thursday and the record low rate remains the only option for the MPC along with the continued quantitative easing.

“But it is absolutely vital that more pressure is put on some of our banks to support companies that need finance to invest in their future.”

Howard Archer, chief economist at IHS Global Insight, said he believed the Bank may ask Treasury approval for a higher QE limit.

“While there seems absolutely no doubt that the Bank of England’s Monetary Policy Committee will keep interest rates unchanged at a record low of 0.5 per cent at their July meeting, we believe that there is a strong possibility that they will expand the bank’s Quantitative Easing programme by a further £25 billion to £150 billion,” he said.

“We think the Bank of England is likely to ask the Government for permission to increase the upper limit of £150 billion for the QE programme.”

The MPC begins its two-day rates meeting on today and will announce its decision at midday tomorrow.