CONFIDENCE among businesses in the region has rocketed despite a slump in sales in 2005.

Although many North-East firms have struggled in the past 12 months, most expect to boost turnover, order levels and profitability in the first half of 2006, according a study by Lloyds TSB.

The region's business confidence index jumped to +34 in December, the highest confidence levels in the UK.

The high expectations have impacted on many companies' plans for the first half of the year, with 43 per cent expecting to raise prices over the next six months, and no companies planning on lowering them. This compares to six months ago when 29 per cent expected to raise their prices.

In the second half of 2005, 43 per cent of companies enjoyed higher sales and only 14 per cent reported a fall.

Steve Bond, of Lloyds TSB, said: "Many UK companies had a very painful time in 2005 and it is not hard to see why.

"The suppression of UK consumer spending and rocketing oil prices served to make the business environment a very challenging place to be, especially for mid-sized firms.

"It is encouraging to see that North-East companies are considerably more optimistic about their business prospects in 2006."