BUSINESS confidence in Darlington fell last month, according to last month's business index.

Figures for April were not as encouraging as earlier in the year, following increases in January, February and March.

For businesses in Darlington, turnover and numbers of employees remained positive, while confidence was down.

The temporary relief in the global situation when the Iraqi war ended was overshadowed by the outbreak of the Sars virus, which has had a detrimental effect on tourism, said Peter Hogan, tax partner at Clive Owen and Co, which compiles the business index.

As many of the larger business players, including National Grid, Transco, Intercontinental Hotels and BT, announce results for the 12 months to March 31, analysts will have a better idea about the speed of recovery of the global economy in the aftermath of the war.

According to the Bank of England, the short-term economic outlook is "rather lower" than expected. Consequently, inflation is expected to fall to just below 2.5 per cent by the beginning of next year.

Mr Hogan said that as Chancellor of the Exchequer Gordon Brown argues the UK has not yet passed the five economic tests for entry into the euro, union leaders in the North-East feel entry into the European currency would ease the situation for struggling manufacturing businesses and would encourage more companies to invest in the region.

Closer to home, Darlington businesses are still offering employment opportunities to local workers.

As 60 employees of Four Seasons Health Care move into new offices at the refurbished Lingfield Point, business owners demonstrate their belief in the long-term benefits of expansion and recruitment.

A further 200 jobs will be created in the region by the £6m redevelopment of Newcastle's Haymarket Metro station, which will provide customers with bars, restaurants, shops and a building society.

Mr Hogan said: "This will be a welcome boost to the retail sector, as consumer spending nationally has dropped since Christmas."

"As the national economy recovers, albeit slowly, local business owners proceed with caution. Perhaps this is not surprising as the news is still dominated by acts and threats of terrorism."

The business index assesses local business activity based on figures filed by a selection of firms in and around the Darlington area during the past month.