SMALL and medium sized businesses in the region have recorded the strongest output growth in the UK for the fifth quarter running.

Across the manufacturing, construction and service sectors, business confidence has grown, leading to increased client spending.

The southwest region, which accounts for 11.4 per cent of the UK's Gross Domestic Product (GDP) reported growth in business activity for the third quarter at 57.7 compared with the national average of 55. In addition, the region has recorded the highest levels of employment in the UK.

Nationally, for the first time this year, there are indications that employment levels are rising.

Dennis Grant, chief executive of Swindon Chamber of Commerce, said he was delighted by the findings.

"It is certainly a good sign as well as a clear indication that the SME sector is getting to grips with the economy.

"A lot of SME employers are implementing technology that has given them tighter control.

"They are beginning to realise the difference that they can make to both the local and national economy."

Authors of the study state the recent 0.25 per cent rise in interest rates could serve to dampen the good news, but Mr Grant believes firms are on the ball.