Businesses in Sussex are performing well but growth is slowing and optimism is falling.

The latest economic survey from the county's branch of the Institute of Directors (IoD) indicates continuing, though decelerating, economic growth. It shows general business optimism slipped for the fourth consecutive quarter and has all but collapsed for the manufacturing sector.

Price pressures remained steady despite higher costs.

Chairman of the Sussex branch of the IoD Michael Evans said: "We are increasingly concerned about the downside risks to the British and regional economies. Even though we remain optimistic that a hard landing can be avoided in the United States, there is a very real chance of a serious downturn.

"The downgrading of the EU's growth prospects over the last three months is very disappointing and Japan's economic troubles appear to be all but intractable.

"In addition to the deteriorating international environment, falling equity prices and the cumulative knock-on effects of the foot and mouth epidemic are increasingly damaging economic confidence and activity."

According to the IoD, economic activity peaked in the first quarter of last year, decelerated during the rest of the year and continued to weaken in the first quarter of this year.

The manufacturing sector continued to underperform the economy as a whole and optimism all but collapsed.

The balance of directors who were more, rather than less, optimistic about their company's prospects (relative to the previous quarter) last month slipped to 28 per cent, compared with 35 per cent in December and 57 per cent a year ago.

Employment, output, capacity utilisation and total order books all weakened, though there were small improvements in profits and export orders (after slumping last December).

investment intentions were broadly weaker, especially for investment in research and development and plant and machinery.