The number of businesses starting up in the West Midlands has fallen by 20 per cent this year.
Figures from Barclays Bank show that 16,100 firms started up in the first six months of 2005, compared to 20,100 in the same period last year.
Birmingham was the only area to hold its own, with all the other parts of the region registering a fall.
Solihull, Worcestershire and Sandwell suffered the biggest decline with a drop of 35 per cent in new businesses.
The smallest falls were in Coventry and Herefordshire, which registered a five per cent drop.
Barclays said the West Midland figures reflected a national decline of business start-ups across all regions.
The number of start-ups dropped 14 per cent in London ,17 per cent in the North-west and 26 per cent and 28 per cent respectively in the North-east and Yorkshire.
John Davis, small business marketing director for Barclays, said: "The last couple of years have been phenomenal in terms of start up growth and it would have been difficult to sustain these levels even in the absence of a slowing economy and weaker housing market."
Barclays research also suggested that women entrepreneurs continued to be underrepresented in the region.
Only 17 per cent of new firms in the West Midlands had female founders, compared to 69 per cent founded by men and 14 per cent by male/female partnerships.
Barclays has teamed up with Duncan Bannatyne of BBC2's Dragon's Den to provide a series of radio shows offering tips and advice to business start up customers.