BUSINESSES in the South East have highlighted some critical issues facing them that could affect the region's position as the engine of the country's economy.

Companies surveyed in the autumn regional economic survey carried out for the CBI and the English Development Agencies are more upbeat this year about prospects for output and employment than in the last survey, despite reporting lower profits.

They are less likely than most other regions, however, to invest in training. Many of them say there is no need to raise skill levels in their organisations and are the least optimistic about increasing investment in product and process innovation.

As in other parts of England, businesses in the South East cite high labour and energy costs and increased 'red tape' as major barriers to business growth. Around a quarter of them say that inadequate transport infrastructure is another factor hindering growth.

CBI regional director for the South East, Malcolm Hyde, said: "For some time business has been voicing its concerns on factors that inhibit its ability to grow and more importantly compete on the world stage.

"The simple truth is that if the South East struggles, then so does the UK. Not all the answers lie with business, neither do they all sit with government; there needs to be an understanding and commitment by both for the South East to flourish, let alone achieve the status of a world class region."

South East England Development Agency (SEEDA) business & international director, Jeff Alexander, added: "The CBI, together with other regional partners, contributed significantly to the recently launched Regional Economic Strategy for the South East. This recognises that it would be folly to assume that the South East's current position as a world class region is assured.

"However, the emergence of new global economic powers houses such as China and India offers real opportunities to build on the existing concentrations of excellence in the South East by becoming more enterprising, innovative and skilled."