Bosses in Sussex have welcomed the cut in interest rates by the Bank of England.

Michael Evans, chairman of the county's branch of the Institute of Directors, said the cut of 0.5 per cent would boost business.

He said: "We believe the economy is still slowing, despite healthy retail sales figures. Consumer spending has been bolstered by debt and is likely to weaken in the face of falling confidence.

"Business confidence is also depressed. Even though we didn't expect the half per cent cut, we welcome the four per cent rate.

"With inflation under control, the risks are manageable.

"What worries us is the international situation. The United States will almost inevitably enter recession, euroland's economic confidence is still faltering and Japan seems to be stuck in recession. These external circumstances can only damage our own economic prospects."

The British Chambers of Commerce (BCC) said interest rate cuts alone would not rescue the economy.

It is calling for more government help to provide a boost for small businesses that need it most.

The group has put forward a series of recommendations to help struggling manufacturers, including deferring the payment of National Insurance contributions and VAT, as happened during the foot-and-mouth crisis.

Director general David Lennan said: "For many businesses in key sectors, 2001 has been a year of pain not prosperity and, while the Chancellor must deliver greater opportunities for those who can thrive, urgent commitments are needed to help those struggling to survive."

The BCC is calling on the Chancellor to increase the personal tax allowance for self-employed entrepreneurs and postpone the renewables obligation, which comes into force in January and will penalise companies not using renewable energy.

It has outlined a series of proposals which focus on raising the long-term productivity for UK business, such as piloting mutual support networks, which would encourage firms to share resources and best practice.

The BCC wants the Government to provide greater incentives to both employers and employees to raise skill levels, including a tax credit for small firms if staff have time off for training.

Mr Lennan said: "Most small businesses have a genuine desire to invest their capital in their people and those that do see it as money well spent.

"There are additional costs for small firms that larger firms don't face, for example paying overtime to cover for staff training.

"This is what we believe the Government's training tax credit should be addressing."