Allan Jones is the chairman and chief executive of Porter Lancastrian, a manufacturing business in Chorley employing about 80 people producing bar dispensing equipment and TVs for bathrooms.

He said last week's reduction by the Bank of England of the interest rate wouldn't necessarily mean that companies could get funding.

"What effects small businesses is the rate at which they are lent money. We're down to one-and-a-half per cent but I can't see anybody lending at that rate.

"If you were to borrow with a good credit history, you had assets and they'd lent to you before, a good rate would be one per cent over base but not many people would get that.

"Now that we've got the credit crunch that figure might be one-and-a-half per cent or two per cent over base.

"The problem is with people who are perceived as not going to be a good risk.

"If you are a small business and you turnover £150,000 a year and your total assets are your house and that's mortgaged up to the hilt, then it's not seen as a secure investment.

"The problem is will they (the banks) lend at all?"

"The key word is confidence. Last week I heard someone way 'I hope the bank don't realise I'm overdrawn'. The banks know the day before you do!

"The head-in-the-sand attitude is a recipe for disaster. People have to speak to their banker or lender."

Mr Porter said that all the doom and gloom was overshadowing those success stories that were out there.

"I still believe we're talking up the recession. We produce TVs for bathrooms and we've just sold a couple of hundred thousand pounds worth to China.

"The recession is hitting the retail and the financial sector very hard indeed. The last recession virtually left the financial sector untouched. Customers don't spend because they're worried and that can escalate. I think we're stuck with it until the end of 2009."

The businessman said there were some green shoots of recovery in the Chorley area and said one way to mitigate the job losses was to encourage people into self-employment.

He said: "Talking to the Business Development Group, one of the big successes of Chorley has been the number of start-up businesses. The problem is they employ one or two people. When a firm such as Woolworths goes bust you lose a lot more jobs."