Fewer people started businesses in Sussex and the South- East from July to September than at any time since mid-1992.

Research by Barclays showed an 18 per cent reduction in new firms in the region.

In England and Wales, 76,900 businesses were started, a 27 per cent fall on the equivalent quarter of 2000.

From April to June 1992, there were 76,800 start ups.

In addition 94,400 businesses closed in the third quarter of 2001, an eight per cent increase on the same period last year, meaning the total number of businesses contracted slightly over the quarter to 2.74 million.

This was the fourth quarter in succession with fewer start ups than closures. There are now two per cent fewer businesses than there were a year ago.

In the second quarter of 1992, however, there were 152,600 business closures.

The 18 per cent fall in start ups in the South-East was attributed in part to a reduction in the number of business and computer services starts, while in the North-West, Wales and the South West, an 11 per cent decline was blamed partly on the foot-and-mouth crisis.

Mike Rodgers, managing director of small business at Barclays, said: "Widespread comment to the effect the economy is in difficulty has understandably had a major impact on the timing of people's decisions to start a business.

"While we are undoubtedly experiencing a slowing of economic growth, talk of recession appears excessively pessimistic at this stage.

"It is not surprising at a time of historically-high employment rates and a likely slowing of the economy, many people are deferring their plans to start a business and staying in salaried employment."

The good news was businesses were now surviving longer: 65 per cent of businesses started two years ago were still trading, compared to an average figure for two-year-old businesses of 59 per cent in the period 1992/2001. Even in comparison with more recent times, the improvement was notable. At this point in 1999, the equivalent survival figure was 62 per cent.

Barclays believes the UK economy is relatively well-placed to withstand the effects of slower global growth and the economic situation prior to September 11 was not as bad as many analysts have suggested.

Mr Rodgers said: "All the evidence suggests business owners are making use of all the advice and guidance available to them when they start up and, as a result, the businesses are surviving longer. If businesses do experience difficulties, they need to talk to their stakeholders straight away to find a solution."

www.barclays.co.uk