Unemployment soared to 8.4 per cent in the West Midlands last month - more than any other UK region - 36,000 more people were added to the jobless list.
The number of people looking for work in the region jumped to reach a total of 223,000 in the three months to February, from 210,000 in the quarter to January.
Business leaders say the region is desperate for help to combat the impact of the recession, which has seen manufacturing employment plummet to a new record low, and want a scheme to help firms make wage payments.
There are now 2.1 million people out of work in the UK - an unemployment rate of 6.7 per cent and the highest level since Labour came to power in 1997 - after the biggest quarterly rise in 18 years, of 177,000.
And in a further blow to the Government, the number of UK people claiming Jobseeker’s Allowance (JSA) increased for the 13th month in a row in March, up by 73,700 to 1.46 million, the highest total since September 1997.
Birmingham Chamber of Commerce and Industry policy adviser Kiran Virk said: “The chamber has long been calling on the government to introduce a sector wage subsidy scheme which will help specific industries such as the automotive sector.
“This would help retain staff during the downturn and prevent a loss of skilled labour to other sectors and countries. Immediate action is needed from the Government to ensure the West Midlands is not left behind.”
A raft of other gloomy figures from the Office for National Statistics (ONS) also showed a record low number of vacancies and the lowest rise in average earnings since 1991.
Experts and union leaders agree the figures paint a bleak picture for the state of the nation’s economy.
TUC general secretary Brendan Barber said: “These are another set of grim figures. There are no green shoots here, and there will be no real recovery until unemployment starts coming down.
“Mass unemployment drains public finances, ruins lives and blights communities. Everything in today’s budget must be designed to create or save jobs.”
The ONS said average UK earnings increased just 0.1 per cent in the year to February, down by 1.6 per cent from the previous month, which is a record low.
The number of UK manufacturing jobs fell by 139,000 in the quarter to February, compared to the previous year, to 2.75 million - another new low.
Job vacancies fell by 68,000 in the quarter to March to a record low of 462,000, while a record 270,000 people were made redundant in the three months to February.
Employment minister Tony McNulty said: “We know that times are tough and these figures are disappointing.
“However, lots of people are still finding work and while there were 363,500 new claims for JSA last month, over 275,000 people flowed off unemployment benefits - that’s an increase of 22,500 from last month.”
Theresa May, shadow work and pensions secretary, said: No amount of Labour spin can cover up the fact that this Government closed a job centre every week in 2008 while unemployment was rising.”