Most Yorkshire businesses remain optimistic about future growth but confidence levels have slumped over the past year new research shows.

The latest research by Santander Corporate Banking emphasises a North-South divide in confidence levels, with Yorkshire firms lagging well behind those in London and the South East – and below the national average.

In spite of the current recession, Yorkshire businesses with a turnover of up to £20 million expect to grow revenue by 56 per cent over the next five years – or nine per cent a year.

But this is nearly half the growth expected a year ago when firms were looking at average five-year growth of 109 per cent.

Nationally, the average company expected to grow revenue by 88 per cent over the next five years, according to the latest findings, compared with 104 per cent 12 months ago.

Santander said regional business owners were looking to explore new options to help achieve their growth ambitions, with 25 per cent looking to introduce new products to drive growth as an immediate priority.

One in ten regional firms surveyed said their business had never been in better shape but current trading conditions was seen as the biggest challenge facing 61 per cent of respondents.

Neil Williams, Santander Corporate Banking regional director, said: “While business owners in Yorkshire & Humberside remain cautious in the short term, focusing on survival against an uncertain economic background, they are clearly optimistic in their longer term prospects. Many people think survival is about holding onto their cash but in order to promote longer term growth, businesses need to continue to invest.

“There are many ways that companies can look to improve the quality of their business and ensure they are well placed to take advantage of opportunities to grow.

“Given the low anticipated growth in the UK over the next few years, companies looking to meet their aspirations will need to focus on the fundamentals such as cash flow, customer service and strategic planning to ensure they can realise their ambitions.”

In London and the South-East companies are anticipating growth of around 153 per cent and 140 per cent respectively over the next five years.

Meanwhile, senior manufacturing executives have warned that limited access to raw materials is posing a threat to growth. For one in three companies it was their top risk, according to research by EEF, the manufacturing body.

It has joined with environmental group Friends of the Earth to call on the Government to take urgent action, including establishing an Office for Resource Management to deal with the crisis.

They also want a task force to review existing targets and recommend policy changes to improve recycling.