SMALL businesses in Darlington could suffer because of new maternity leave rules, the business index for December shows.

The Darlington Business Index, compiled by Clive Owen, senior partner at Clive Owen and Co, chartered accountants and business advisors, also shows that businesses suffered in December due to the holiday period.

Employers in small companies are becoming increasingly worried that increases due in April to maternity pay and leave, plus the introduction of paternity and adoption pay, will affect their competitiveness.

But the index does show that this has not affected employment figures so far.

Mr Owen said: "As the likelihood of war increases, Darlington businesses need to be resolute in order to achieve their targets in the coming months.

"It will be interesting to see next month whether business owners continue to recruit in the face of adversity."

Forecasts about slumps in retail sales did not materialise in the town, with HMV, Waterstones and Boots the Chemist reporting strong Christmas sales.

Confidence in the retail sector generally remains high, with Morrisons supermarkets competing against big retail concerns, such as Walmart, for the acquisition of Safeway.

But the index also shows the stock market continuing to reach worryingly low levels. If share prices get worse before they get better, 2003 will be the first year since 1940 to bring four successive years of falling stock markets.