West Midlands business leaders have given a guarded welcome to yesterday's announcement that unemployment in the region has fallen by 4,000.

The unemployment rate in the region is now 9.7 per cent, still among the highest in the country and well above the national average of 7.8 per cent.

One of the biggest concerns in the region is the level of youth unemployment, which has risen for the past 16 months. Birmingham now has a youth unemployment rate of 20.8 per cent, which is close to the national figure. 

However, the overall drop in the jobless figure is consistent with the findings of the Chamber's recent Quarterly Economic Survey (QES), which saw an increase in the numbers of both manufacturers and service sector businesses expanding their workforce.

The QES found that 27 per cent of service firms and 24 of manufacturers were looking to increase their workforce in the next three months.

Christine Braddock, president of Birmingham Chamber of Commerce, said: "We are pleased that unemployment has fallen this quarter, albeit by a small number, after months of rising.  

"However, we believe that far more needs to be done to improve the skills base of both the city and the region, which currently has the lowest level of skills in the UK after the North West.  

"Between January and February more than 6,000 job vacancies were advertised in Birmingham job centres and yet unemployment continued to rise.  

"Time and time again we hear from employers that many candidates do not meet their basic skills needs in areas such as literacy and numeracy."

Mike Ashton, spokesman for the West Midlands Chambers of Commerce, said: "The West Midlands still has 260,000 people who are unemployed, and we feel that the Government should do more to enable business to create the jobs needed by these people. 

"The situation is particularly unacceptable where youth unemployment is concerned - nationally, we are seeing the highest level of jobless 16 and 17 year olds since records began in 1992. 

"In order to help tackle this, we believe that the Government must do more to free business from the burden of regulation and red tape, which hinder job creation by diverting resources and funds away from growth.  

"While we welcomed the Budget announcement that small and micro businesses would be exempt from new regulation for three years, the Chamber feels that such measures should go much further."