TWO new reports paint a gloomy picture of business life in the North-west.

Economic analysts Business Strategies say the region could be hit by recession next year.

Even if this worst-case scenario does not develop, the most optimistic forecast suggests that the North-west's low economic growth will make it one of the worst-performing areas of the country this year and suggests that things will not be much better in 2002.

Growth of 0.8 per cent is forecast next year against the national average of 1.7 per cent -- itself the lowest for a decade.

Business Stategies' economist, Rebecca Snow, says: "The outlook for the next two years is disappointing and results from the manufacturing recession and poorly performing services."

The other report -- Experian's Corporate Health Check -- confirms that the average profitability of companies in the North-west was already in steep decline months before the terrorist attacks in America on September 11.

Average return on capital fell to 8.50 per cent in the 12 months to March, 2001 -- the 10th consecutive quarter of declining profitability in the region.

Profitability in the North-west has fallen by a third in two years.

Peter Brooker of Experian said: "If there was any hope earlier in the year that the economy might turn up towards the end of this year, this has probably now been dashed."