ACCESS to funding and confidence in the system are vital to economic recovery, Notts business leaders said today as they reacted to the Government's £50bn package to rescue the UK's ailing banking system.

Evidence has emerged that businesses are having difficulty getting overdrafts approved and funding for confirmed forward orders.

Regional leaders at Derbyshire and Nottinghamshire Chamber, the CBI and the Institute of Directors all welcomed the decision to make massive taxpayer funding available to banks.

They say it is crucial for the future of the economy that confidence returns to a banking system that shows disturbing signs of seizing up.

Businesses have had difficulty getting loans, while the property market has almost come to a standstill as mortgage rates go up while house prices plummet.

George Cowcher, chief executive of Derbyshire and Nottinghamshire Chamber, said banks must now focus on building "sustainable relationships" with business.

He said: "The situation we are facing is very serious, and this announcement demonstrates that the Government appreciates exactly how serious. The most important thing is to ensure continuing financial support for business.

"We are already hearing that some businesses are finding it difficult to get overdrafts extended."

Ron Lynch, the East Midlands director of the Institute of Directors, said he was also aware of businesses struggling to raise money.

He said: "We are still getting businesses doing well, but we are also getting businesses not doing so well, and we are getting businesses doing poorly.

"What they all have in common is that they need better access to finance.

"The funding markets have been frozen solid. They may begin to thaw a little bit now, but it could take two years for this to play through the system."

The shock decision to cut interest rates, which came a day earlier than expected, saw some banks immediately pass on the full 0.5% cut.

But The Nottingham building society was not among them, with chief executive Ian Rowling saying it was too early to tell whether they could apply the full reduction to the rates they charge borrowers.

He said: "There is no doubt that these are momentous times, but there are complex, inter-connected issues affecting the global economy and it will be some time before we know what impact the Government's action is going to have."

Broxtowe MP Nick Palmer said: "It is very welcome as part of the overall British and international package. Although there is concern about the share prices of more significance long term is the wider economy."

Government Minister and Gedling MP Vernon Coaker also welcomed the rate cut. But he added: "It is important it is passed on to the home owners and buyers."

John Heppell, Nottingham East MP, agreed. He said: "A lot of people will be thinking that is a bit less I have to pay for my mortgage."

Rushcliffe MP and former Chancellor Kenneth Clarke said: "Our mortgages will only be cheaper if money markets start to operate properly and banks start lending to each other."

He said it will take a couple of days to see if the measures have worked.