BUSINESS confidence in the region has increased to a three-year high, leaving the rest of the UK in its wake, a report has shown.

North-East members of the Institute of Chartered Accountants in England & Wales (ICAEW) are the most optimistic about economic prospects for the next 12 months, according to research.

The quarterly business confidence monitor from the ICAEW and Orange UK has given the North-East an overall confidence index of +26.8, the highest score recorded for the region since 2003.

The figure has increased significantly from the +8.1 recorded in the summer and compares with the current national average of +6.2.

ICAEW regional manager Keith Proudfoot said: "These findings are consistent with other recent research, including the latest data from purchasing managers, in which North-East firms reported burgeoning order books.

"It represents a remarkable turnaround since this time last year, when the region's BCM index stood at minus 2.3.

"Even the prospect of a further rise in interest rates does not seem to be fazing the region's businesses, which are obviously confident that current economic growth will be sustained into next year."

The survey of 1,000 finance professionals also found that North-East firms expect forecast profit and turnover growth to accelerate in the next 12 months, by nine per cent and 7.3 per cent respectively.

Staffing levels are predicted to rise by two per cent in the next year while training budgets are anticipated to increase.

However, rising interest rates are expected to peg the region's capital investment growth to just 0.1 per cent, which is below the 1.9 per cent forecast for the rest of the country.

Shaun Orpen, small and medium enterprise director for Orange Business Services, said: "Having lagged behind the rest of the country for so long, the North-East has entered a catch-up phase and the change in fortunes over the past 12 months is nothing short of spectacular.