Small businesses lost over £1bn last year by holding their savings in business current accounts that offer 0 per cent interest, research by Flagstone Investment Management has revealed.

The report found that interest rates are now lower than they were this time last year with four of the top five banks offering no interest whatsoever, and Santander offering just 0.25 per cent.

Recent figures from the British Bankers’ Association show small businesses held £95.3bn in business current accounts in 2015 compared to just £8.1bn in 2014.

Nearly 96 per cent of all small enterprises use the five largest banks, but would be able to earn up to 1.8 per cent if they moved elsewhere.

Andrew Thatcher, founder and managing partner of Flagstone Investment Management, said: “Small business owners are paying an exorbitant and rising price for neglecting to switch bank accounts.

“Interest rates for business customers are changing faster than ever before as several new banks compete for deposits and try to establish themselves in the market.”