Banks and the Government have been urged to help small and medium-sized businesses after a slump in regional business confidence.

The latest Business Confidence Monitor from the Institute of Chartered Accountants in England and Wales found that confidence in the south east fell below the national average in the last quarter.

Fay Webster, executive director of the ICAEW in the south east said: "The ongoing credit crunch has led to increased caution from lenders meaning that access to capital has become a greater challenge for one in five businesses (22 per cent) in the region.

"There are schemes which companies may draw on for support in this area such as the SME Funding Advisor Scheme which our members are involved in.

"However I would urge the banks and government to ensure help is available to small and medium sized businesses during this downturn as they are the key drivers of the economy in the South East."

Financial experts in the region have become increasingly wary of the impact on business performance of a slowdown in the economy. The ICAEW however still believes that a UK recession is unlikely, with a low level of growth still predicted.

Ms Webster added: "The slowdown in the economy has spread to all sectors, to businesses of all sizes and across all regions. In the South East the weakening housing market and worsening consumer prospects are key in driving the decline in optimism."

Sectors which are particularly suffering are communications and IT, both significant players in the region.

South East firms also now expect a tough year ahead with growth in both profit and turnover likely to slow.

Turnover increased on average by 5.3 per cent in the year to date, with growth expected at 4.9 per cent in the coming 12 months.

Predicted profit growth in the region has been downgraded from 6.1 per cent in the first quarter to 4.7 per cent, although this is still above the national average.

The ICAEW also found that many firms are cutting their budgets in response to the more challenging economic environment.