Profitability among companies in the district has fallen by 24 per cent in just over two years, according to a new survey.

Rising costs caused by legislation have caused the drop, according to business services firm Experian.

The latest Experian report on companies in Yorkshire and Humberside found profitability has fallen from 10.39 per cent in March to 9.87 per cent in June 2002.

Experian measured profitability by looking at the average returns on capital of firms.

Peter Brooker, author of the report, said: "Corporate profitability in the region staged an encouraging recovery throughout the whole of last year, when profitability rose in each quarter.

"This latest fall is very disappointing and represents a 24 per cent decline in profitability since peaking in early 1999 at 13.06 per cent.

"Despite this setback, Yorkshire and Humberside is the only region to be more profitable than it was for the same period in 2001.

"Nationally, profitability fell from 8.37 per cent in March to 7.57 per cent in June 2002."

Mr Brooker said the decline in profitability in the latest quarter coincides with a drop in business confidence across almost all parts of the UK. "Part of the reason for lower profitability lies in the higher costs for businesses, mostly from new legislation rather than wage inflation."

The survey also found business failures in the region have risen in the first nine months of the year.