BUSINESS is tough as the North-west faces a possible recession.

This is one of the conclusions in the latest Grant Thornton Business Barometer -- a six-monthly regional survey of owner-managed companies.

But, there are signs that small and medium sized enterprises are ignoring the warning signs and predicting further output and profit growth over the next six months.

According to the survey 20pc of those quizzed expect the UK economy to get better, 20pc say it will get worse and the vast majority believes there will be no change.

Mr Howard Hackney, business advisory partner at Grant Thornton, said: "The findings of this Barometer are in line with similar surveys carried out in other parts of the country.

"This cannot be co-incidence so we would advise companies to keep their eye on the bottom line and control costs."

Other Barometer results were:

Legislative compliance had now overtaken Information Technology as the most rapidly increasing cost to business.

The number of bosses taken to industrial tribunals by their employees increased and more employees won their cases than six months ago.

Fifty per cent of companies had difficulty recruiting staff with the right skills.

Manpower

Many firms planned to increase staff training, especially in the field of IT.

Capacity to handle orders fell across the region for reasons which ranged from lack of plant and finance to lack of suitable manpower.

Support for entering the Euro fell sharply, but the importing of vehicles to save money continued to rise, especially on Merseyside.

More than four out of five firms said they had a web site, but many were just e-catalogues and few were interactive.

The Commonwealth Games, the Regional Development Agency and the Welsh Assembly raised little enthusiasm from the companies surveyed.

Many believed the Games would actually damage their business.

There was much concern about current rail problems, with many companies believing profits had been affected.

Many blamed Railtrack, but some blamed successive governments.

There was evidence that the trains had lost customers permanently because of unreliability and increased cost.