BUSINESS confidence in York and North Yorkshire has hit a three-year high.

But firms should not be complacent as low levels of unemployment could leave companies struggling to recruit workers.

Regional development agency, Yorkshire Forward and the CBI's six-monthly survey of economic trends in the region have revealed that increases in domestic orders and jobs have made North Yorkshire businesses confident about the future.

Almost a third expect their orders to increase further within the next year. In fact, optimism in the area is at its highest since March 2000.

But while the regional economy recovers, Yorkshire Forward has warned that with unemployment in the area at its lowest for 30 years, businesses could fail to attract new recruits if they don't invest in skills training.

York has one of the lowest unemployment rates in the country with unemployment at just 1.2 per cent while less than two per cent of people in the rest of the county are out of work, compared with a national average of five per cent.

Chairman Sir Graham Hall said:

"These results are encouraging and show that the regional economy is rebounding from recent economic shocks and continuing global uncertainty. The stability of interest and exchange rates, and low unemployment have all helped to boost confidence.

"But following the downturn, with unemployment still at a record low and the economy showing signs that an upturn is on the horizon, we can foresee future recruitment problems for businesses next year. We need to invest now in training the current workforce to deliver tomorrow's extra orders and market opportunities."

Only 57 per cent of companies in Yorkshire provide training for staff compared to the national average of 67 per cent.

Only seven per cent of firms have links with research and development links with universities.

The survey also showed that despite the boost in domestic orders, business overseas had not increased and the average profit for businesses was actually down from last year.

Andrew Palmer, assistant regional director of CBI Yorkshire said: "The global recovery has lifted the mood here quite significantly. But conditions are still very competitive.

"This was one of four regions where exports failed to increase over the last year.

"Orders at home and abroad are expected to grow over the 12 months ahead, but businesses in Yorkshire and the Humber believe they will continue to struggle to make money on those sales.

"Profits are down on a year ago and are expected to remain under severe pressure."

Updated: 15:58 Monday, December 01, 2003