Pictured above: Will Rogers

West Midlands businesses say the increase in inflation to four per cent is now expected to result in a rise in interest rates. 

The raft of employment legislation to start in April will further contribute to the uphill fight business are experiencing in the current economic climate.

According to Birmingham Chamber of Commerce Group's (BCCG) latest quarterly economic survey, there is little confidence that turnover and profitability will improve and only 23 per cent of manufacturers are working at full capacity.

"The business community is suffering," said Will Rogers, policy advisor at BCCG. "The fall in the pound and the rise in VAT have both played their part in the rise of inflation. So interest rates will have to rise too. But raising interest rates at a time when fiscal policy is being tightened will heighten the pressures facing business even more.

"If the recovery is not to be put at risk, then the government needs to defer putting up interest rates until at least the end of this year."