THE North-East is helping to drive economic recovery thanks to the “strong entrepreneurial spirit” of smaller firms in the region, according to a study published today.

An index drawn up by Barclays on which regions benefited most from their small businesses placed the North- East on top, ahead of London and South-West England.

A study of 1,000 owner-managers for the bank by Kingston University placed the South-East at the bottom when issues such as growth, jobs and expected profits were taken into account.

Professor Robert Blackburn, of Kingston University, said: “In terms of regional performance, the Barclays Business Regional Impact Index shows that small and medium-sized companies in the North-East, London and South-West are proving to be the most resilient in today’s tough economic climate.

“The North-East, which tops the index, is particularly interesting, and its position at the top of the table could be down to entrepreneurs in this region having a long-standing propensity to innovate and export beyond their limited regional market, in contrast to those enjoying close proximity to larger metropolitan markets.”

The report said that smaller firms had “battened down the hatches” this year and remained cautious about their prospects next year.

Steve Cooper, of Barclays, said: “The current economic climate continues to have an impact on many small businesses in Britain. Confidence remains low and clearly businesses are cautious as we approach 2012, with job creation not being a priority in the short term.

“Particularly in the South- East and London, it seems the cuts in the public sector and a reduced role for service companies have raised fears of a decline. These fears could be unfounded, but the uncertainty is real enough to damage confidence.

‘‘However, it is encouraging to see there is still optimism, with businesses introducing new products and services to help them prepare for the recovery.

Innovation is a great way to drive growth in a business, potentially exposing small businesses to new markets, both at home and abroad.”