Midlands business leaders have urged the Bank of England Monetary Policy Committee not to put up interest rates.

Birmingham Chamber of Commerce and Industry policy director Jerry Blackett hit out as the MPC prepares to announce its latest monthly figure today.

There have been hints from the committee that it is looking at an increase from the current 4.75 per cent to meet its two year targets, but probably not just yet.

"It is usually the manufacturing sector that is feeling the pinch - and it still is - but the retail sector is looking fragile too," said Mr Blackett. "The beginning of the year was not a good time for the shops and it would be imprudent to raise rates and dent consumer confidence even more.

"The continuous talk about consumer over-spend and its effect on inflation has undoubtedly had an impact alongside all the bills we all have to pay at this time of the year. A rise in rates will undermine any signs of a recovery in either sector."

David Stevens, president of Solihull Chamber, said: "It is a simple message to the MPC, don't kill off what has been achieved in the last few months while rates have been at a standstill.

"Local economies are thriving but by imposing a higher rate, competitiveness will go out of the window, shops will find trading difficult and manufacturers will be hit even harder when trying to pit themselves against markets abroad."

Louise Beard, chief executive at the Coventry and

Warwickshire Chamber of Commerce, said interest rates must be kept low to help compensate businesses for the spiralling costs of red tape.

The call came after British Chamber of Commerce figures showed that the burden of regulations introduced since 1998 had so far cost UK industry £40 billion.

Ms Beard said the figure was astronomical and had to be addressed.

"The MPC really has done some outstanding work and should take a lot of credit for the current stability of the economy. Keeping the rate at such a consistently low level has done wonders for UK business, but that good is undone as we are battling against reams of costly regulation." The Engineering Employers Federation said manufacturing growth was at its slowest for over a year, with exports outpacing domestic orders.

Firms in the North West and the Midlands had cut jobs in recent months and overall employment levels were not expected to increase over the next quarter.

EEF chief economist Steve Radley said: "This slowdown in growth is not unexpected and may prove temporary but there is no room for complacency.

" Whilst manufacturing passes through this soft patch, the Bank of England and the Chancellor have a crucial responsibility to avoid measures which could unnecessarily damage confidence."

Harvey Williams, national and regional spokesman for RICS West Midlands said: "The West Midlands in particular - the heartland of the UK's manufacturing base - is certainly not braced for any increase in the base rate and would welcome the reverse.

"A fall in interest rates at this point would really help our ailing industrial sector.

"Careful note should also be taken of current housing market conditions.

"While a mild recovery from the winter snowfalls might be on the cards, this sector is not showing the same inflationary picture as it was last year which further defeats any argument in favour of a base rate rise."

Britons are anxious about the prospect of rate rises.

A survey by Bradford and Bingley found that 69 per cent had fears for the future, while 32 per cent of mortgage holders would be worried if their monthly payments went up by £50.