BUSINESS confidence in the region has hit a two-year high, according to research.

North-East companies are more bullish about economic prospects for the next 12 months than the national average, the Institute of Chartered Accountants England and Wales (ICAEW) said.

Its business confidence monitor shows a rising tide of optimism, with the region's finance professionals predicting a 7.3 per cent rise in profits this year - higher than anywhere else in England - compared with 5.9 per cent nationally.

Turnover in the North-East is also forecast to rise by 6.5 per cent in the next 12 months, just above the UK average of 6.3 per cent, while the outlook for capital investment growth remains strong at 3.9 per cent, against 2.2 per cent in the country as a whole.

ICAEW regional manager Keith Proudfoot said: "From the gloom which marked the latter part of 2005, our business members are now clearly in buoyant mood about prospects for the next 12 months.

"As well as bullish forecasts on profits, turnover and capital investment, there is more optimism among exporters, driven by the positive outlook for demand from the eurozone."