The Midlands economy is in good shape but retailers could be in for a hard Christmas, a top Birmingham businessman warned today.

David Waller, Midlands chairman of accountants PricewaterhouseCoopers, said confidence had emerged unscathed from recent interest rates rises but urged the Bank of England to call a halt or risk real damage.

With so many people coming off two-year fixed rate mortgages and facing big increases in payments, consumer electricals and white goods were liable to suffer. "It could be a tough Christmas.

Not in food and drink but for discretionary purchases and mid fashion sectors where people might cut back a bit."

He was speaking as PwC posted strong results, with a six per cent increase in turnover for the 2007 financial year to £2.1 billion. Underlying net revenue was up nine per cent and underlying profit grew 11 per cent to £631 million. Average profit per partner rose six per cent to £757,000, with partner numbers up to 822.

Kieran Poynter, UK chairman, was paid £2.8 million last year. Total profit for the financial year amounted to £702 million.

Mr Waller said the strength of the Midlands economy could be seen in the firm's corporate finance performance.

It had grown significantly in a very active market.

The first couple of months of the new year were well ahead and he was anticipating another record year for the sector.

While the recent stock market jitters and credit crunch might affect highly leveraged deals, ordinary sales, mergers and takeovers were carrying on as normal, with Midland corporate bankers continuing to take a prudent approach.

Mr Waller said: "In most areas the Midlands economy is holding up or doing better.

"There are still some traditional areas suffering but we are seeing the emergence of new businesses."

And he cited high tech materials and aerospace as two examples.

Construction was strong while the auto industry, despite setbacks, was maintaining the total number of cars made in the Midlands.

Land Rover, Mini and Toyota were all doing well. And the new XF was a boost for Jaguar.

And, with the presence of Nanjing picking up the pieces of MG Rover, there was a huge opportunity for the region to become a hub for Chinese and Indian firms moving into the UK and Europe.

That meant the region needed to be receptive and welcoming, joined up in its messages. It also meant solving city region issues, and pushing ahead with Birmingham Airport's development to ensure direct flights to China and the West Coast of America.

And Mr Waller told Minister for the West Midlands, Liam Burn: "The region needs a strong voice at the table of central Government."

It was vital that it came across just how much the region contributed to the ecomomy, well-being and culture of the UK.