Thousands of small businesses in Sussex face crippling bank charges for accepting the euro.

Most major banks, including NatWest, Barclays, HSBC and the Co-operative Bank, are charging traders to bank the euro into a sterling account.

Only larger businesses which can afford a separate euro account will be exempt from the fees.

Landlord David Edwards changed his tills to accept the euro but was told by his bank he would be charged two per cent commission, with a minimum charge of £2.50, every time he wanted to bank it.

Mr Edwards, landlord of the Rose and Crown pub in Worthing, said: "I thought we may as well go with the euro because a lot of our customers return from Europe with foreign money.

"But now I may have to scrap the plan.

"What if someone wanted to buy an OAP meal at £2.95 in euros? If I have to pay a £2.50 fee every time I wanted to bank a few euros there would be no point. I just wouldn't do it."

The cash registers in the Montague Street pub were changed to accept the currency in time for the euro's launch on January 1.

But, when Mr Edwards went to the bank, he was stunned.

He said: "What a sting to small businesses. Just because we can't afford to have a separate euro account we have to pay ridiculous charges.

"Why should traders like myself be penalised while larger firms escape the fees because they bank millions?

"I think it is totally wrong at a time when we are being encouraged to think about the euro.

"There is definitely a demand for accepting euros, especially on the South Coast. Only yesterday a man came in who had returned from Spain and wanted to get rid of a box of euros. Now I am having second thoughts about accepting them."

According to NatWest, the banking fees for the euro, which on yesterday's Post Office sell rate were 1.54 euros for £1 sterling, were at that level because it was still classed as a foreign currency.

Spokesman Ronan Kelleher said: "The euro has replaced 12 European currencies.

"So it will be treated as no different from when customers came back from holiday with francs or pesetas. The service charge is to convert the euro into sterling.

"These fees do not apply to larger businesses as they are banking millions and will probably hold a separate euro account. This means they will not be converting it into sterling as with small businesses."

Barclays Bank also charges small businesses wanting to bank the euro in sterling accounts two per cent commission with a minimum charge of £3.

Spokesman Alistair Smith said: "Small businesses have to ask themselves whether it is worth the time and money to hold a separate euro account.

"This is usually only worthwhile for large businesses."

HSBC charges two per cent commission with a £3 minimum charge for euro notes and coins banked into a sterling account.

The Co-operative Bank charges 1.5 per cent commission with a minimum fee of £3 to bank euros in sterling accounts.

Lloyds TSB bank did the same until recently but its fees were scrapped. Customers can now bank all foreign currency for free for the foreseeable future.

Prime Minister Tony Blair stepped up the pressure for a euro referendum on Thursday by warning the UK it must stop hiding its head in the sand over the single currency.

He stressed the Government's policy had not changed but said the UK could not simply pretend it did not exist.

Mr Blair said: "We have got to prepare for it but the eventual decision is for the British people."