Kent business leaders have called on banks to reduce interest rates after a quarter-point cut in the base rate to five per cent.

The reduction, by the Bank of England's monetary policy committee was the third cut since early December.

Banks appeared to ignore the cut, with some increasing their rates on a range of loans.

Roger House, Kent and Medway regional chairman for the Federation of Small Businesses said: "We welcome this reduction in the interest rate. But the key to this is that we urge the banks and the mortgage lenders to reflect it in their charges to customers. Potentially, then, small businesses would save millions of pounds in repayments and be freed up for greater investment, greater confidence and higher achievement.

"Coupled with this is the importance of the housing market, which has close links with, and impacts on the small business sector. We call upon the lenders to reflect the changes in the rates charged to the borrowers."

Gravesend-based Mark West of Berley Chartered Accountants said banks would not pass on benefits to businesses. He said: "Businesses in Kent are struggling to avoid liquidation, and company directors are facing bankruptcy as banks tighten their grip on business loans.

"The credit squeeze has given lenders the opportunity to compel small and medium enterprises and specifically the directors, to provide personal guarantees to secure the corporate borrowings of their business, clearly at a time they need the most help.

"This rate cut will not change the banks’ stance one iota. They are effectively using this situation to squeeze companies."

Berley have set up a support line for companies that are facing difficulties. The number is 0800 458 1894.