A business "buzz" continues in York and North Yorkshire with high optimism for the future.

That is the good news reported by Len Cruddas, chief executive of the 750-member York and North Yorkshire Chamber of Commerce.

It comes as the latest CBI/Yorkshire Forward survey of regional economic trends shows Yorkshire's companies reporting increases in orders, employment and output, ahead of the national average. But the report said that red tape was still holding them back.

Mr Cruddas said that as in Yorkshire as a whole, the general trend in York and North Yorkshire was that businesses were "very optimistic and the economy is doing well".

While he agreed that red tape was holding firms back, it tended to affect the smaller businesses who were less able to tackle bureaucracy than larger ones.

More serious, however, was the problem of success - with relatively full employment leading to skills shortages, "and it's not just the knowledge-based firms. It ranges from people with customer service skills in the tourism sector to hi-tech ventures," he said.

For the first time since the CBI/Yorkshire Forward survey of regional economic trends survey began more than two years ago, the region's businesses are more confident than their counterparts in the rest of the UK.

A balance of 19 per cent of companies across the region predicted that business climate would improve over the next six months, up from 14 per cent last November and well above the 13 per cent average across Britain.

But 43 per cent of companies identified regulation and red tape as the most important factor holding back the region's economic growth. One quarter of all businesses reported a rise in domestic orders over the last year, with 23 per cent saying they expected the trend to continue into next year. A balance of four per cent of firms reported a rise in exports, with eight per cent saying exports would continue to improve.

The survey confirms studies by the Royal Bank of Scotland, which recently reported private sector growth in the region was at its strongest for eight months, while the Lloyds TSB Corporate Business In Britain survey showed 46 per cent of businesses in the region were predicting an increase in turnover over the first half of 2005.

Updated: 10:54 Monday, June 13, 2005