The Institute of Directors has urged the Bank of England Monetary Policy Committee not to raise interest rates this week or risk flipping the country back into recession.

John Rider, chairman of West Midlands region, warned that an increase would also risk the pound strengthening, affecting manufacturing export prospects and particularly hurting the West Midlands.

He cautioned: "Inflation will fall in 2012 as oil, commodity and VAT effects drop out of the year-on-year calculation. Raising interest rates now will have little or no impact on inflation this year, but very considerable impact on current growth.

"The outlook for interest rates is on a knife edge and we are very concerned that the MPC might opt for a rate rise.

"Yes, inflation is well above target, but there is little or no evidence of the wage-price spiral that would spook the MPC.

"The only way to squeeze UK inflation now would be to raise interest rates to such a degree that we flip the economy back into recession, a disaster for jobs and the West Midlands in particular. Why do this when the headline rate will fall next year anyway?"