BUSINESS confidence among finance professionals in the North-East has dipped sharply in the past three months, research has revealed.

North-East members of the Institute of Chartered Accountants in England and Wales (ICAEW) are less optimistic about prospects for the next year than they were in May.

The ICAEW UK Business Confidence Monitor (BCM) found the region's confidence index had fallen to 6.7 from a record high of 28.8 in the previous quarter.

However, the region remains among the most confident in the country, staying above the national average of 4.8.

Keith Proudfoot, ICAEW regional director, said: "The recent hikes in interest rates from 4.5 per cent a year ago to 5.75 per cent this July have obviously knocked business confidence nationally and our region is now reflecting that general malaise.

"The latest BCM confirms our expectations that the economy is likely to grow at a slower pace in the second half of this year and our business members are obviously aware that economic conditions are likely to become more difficult in the next 12 months."

But the region's finance professionals still expect turnover and profit growth of 6.7 per cent and 6.1 per cent respectively, close to the national average of 6.6 per cent and 6.4 per cent.

North-East firms are forecasting a 2.3 per cent increase in staff, compared with two per cent nationally.

Businesses in the region also expect a 2.8 per cent rise in capital expenditure, exceeding the 2.6 per cent predicted for the country, showing long-term confidence of companies.