Hardly anyone expects interest rates to move this month with the Budget statement near, but that has not stopped Midlands business from voicing its protest.
The Bank of England Monetary Policy Committee announces its latest decision tomorrow but in its recent Inflation Report indicated no early cut was on the cards.
James Cooper, policy officer at Birmingham Chamber of Commerce and Industry, said: "Our members will again be hoping for a quarter point cut in interest rates this month. A number of indicators suggest the economy is currently under-performing and is in need of the timely boost that this could bring.
"GDP growth remains below trend, despite the latest upward revision of the year-on year figure for 2005, which now stands at 1.8 per cent. Reports this week suggest that out of the world's seven leading economies, the UK is the only one with interest rates higher than the latest annual growth of GDP.
"Signs also show that the labour market is weakening. In the final quarter of 2005, the rate of people in employment fell, while the number of jobless increased. This pattern was mirrored in Birmingham, where the seasonally adjusted
unemployment rate rose 0.2 per cent to 8.6 per cent in February. This means roughly one in 12 workers in the city are now unemployed."
He went on: "Retail sales volumes also dropped 1.3 per cent in January, their biggest fall since December 2004. Most importantly, the Bank of England's main consideration, the rate of inflation, also fell again in January and is now actually undershooting the Treasury's two per cent target.
"There are, as ever, some inflationary risks. Fears of rising energy prices have been realised in the past month and the price of oil will continue to be susceptible to the volatile geo-political climate.
"However, with wage increases remaining modest and the MPC admitting to the existence of spare capacity in the economy in the minutes of its February meeting, we feel that the BoE has room to manoeuvre. On balance, the time is right for a cut."
Louise Bennett, chief executive of Coventry and Warwickshire Chamber of Commerce, said she felt the Bank was edging closer to a reduction.
The Shadow Monetary Policy Committee's decision to trim rates was an indication of a possible fall.
But Ms Bennett feels the real MPC may well wait another month before reducing the rate from 4.5 per cent.
She said: "The SMPC, which is organised through the Institute of Economic Affairs, voted 5-4 to 'cut' rates. That in itself if not hugely significant apart from the fact that the thoughts of the shadow committee are studied by the MPC.
"Economic data is still mixed especially in consumer spending and house prices but the SMPC vote is an indication, I feel, that we are heading towards a cut in the spring.
"Certainly a reduction in rates would be welcomed by our members. International competition is very tough while prices of materials such as oil continue to rise."
Harvey Williams, spokesman for the Royal Institution of Chartered Surveyors, said: "With the latest inflation
report from the Bank hinting that rates are unlikely to see any imminent changes, we don't expect to see movement this month.
"Again inflationary pressures are likely to see the committee adopt a 'wait and see approach', despite the fact the High Street is still under pressure and recent data shows an increase in job cuts in the manufacturing sector.
"While there were hopes of an upturn in consumer confidence at the beginning of the year, rising energy prices will certainly have a dampening effect on West Midlands households. We understand the need for the MPC to curtail inflationary pressure, but the fall out from this dramatic
price hike should be high on the committee's agenda.
"Stephen Nickell has been very much a lone voice on the MPC, having called for a base rate cut since December. With Mr Nickell due to leave the committee in May, we can only hope that he convinces his colleagues to take action before his departure.
"With Budget day almost upon us, the Committee will be listening with interest to Gordon Brown's forecast for growth. How this information is digested by consumers and the business community could have a significant impact on when the MPC takes action."
