BUSINESS leaders in the country's manufacturing heartland today called for a cut in interest rates to stave off a downturn exacerbated by the collapse of MG Rover.

Birmingham Chamber of Commerce and Industry, which represents companies employing more than 300,000 people in the city and neighbouring Solihull, urged members of the Bank of England's Monetary Policy Committee to drop the cost of borrowing when it announces its decision tomorrow.

"We hope now that the MPC will be forced to act, given the downturn in consumer spending, continued weakness in the eurozone and the decline of the housing market, " said Charlotte Ritchie, chamber policy executive.

The BCI's survey for the second quarter showed a marked slump in manufacturing "almost certainly" linked to Rover's closure.

of the Longbridge plant.

The survey, published this week, showed that only 23% of manufacturers were working at full capacity, a drop of 9%.

"It emerged last month that two members of the nine-strong MPC voted for an interest rate cut," Ms Ritchie said. "It now seems that there is an overwhelming case for a reduction from 4.75% to 4.5% at least.

"Clearly a cut will not please the City in London, but we have felt for some time that a reduction is imperative regardless of the demands from London and the South East.

"However, some City economists think a cut next month is more likely. We fear that may be too little, too late. Manufacturers are dangerously close to the edge."

Sir Digby Jones, CBI director-general, added to the clamour for the Bank of England to reduce rates by also calling for a cut.

Speaking to a business audience in Merseyside last night, he said: "Such a loss of confidence is something the UK economy cannot afford. As there still seems little risk of inflation, the time for action is now."

end