Claims that Sussex is heading for a recession have been disputed.

A leading business information group said economic growth in the county was grinding to a halt and it would be in recession by the end of the year.

But Sussex Enterprise, which represents thousands of businesses across the county, said the claims were wildly exaggerated.

Economic researcher Joe Clease admitted growth expectations had been revised downwards for the coming year but added a recession was not expected.

He said: "More than half of businesses expect their profitability to rise in the coming year. Not as many as last year but nevertheless 20 per cent higher than the rest of the UK.

"Competition is tough for businesses in Sussex, as it is elsewhere.

"Demand from the domestic and the worldwide markets is falling but not to the extent of a recession.

"The situation is similar to 1998 when the same stories circulated.

"There was a big turndown in profitability and confidence then.

"We are still having a business cycle but it is a much shallower business cycle than the boom and bust of the past."

Government spending increases announced over the past few years were coming on stream and should be enough to prop up the economy in the short-term. If the housing market was going down as well, it would be more serious but with the profitability expectations holding up and Government spending increasing we do not expect a recession, especially with interest rates so low."

The report from Experian, a business information group, claimed the region was teetering on the edge of a recession and the economy was grinding to a halt.

It said profits in many sectors were down 15 per cent on the year.

More falls were expected due to the global slowdown and increasing red tape.

Peter Brooker, spokesman for Experian, said: "The decline in profitability by almost one-third in the media sector is particularly worrying, especially in the light of recent reports of falling advertising spending on television."

In Sussex, falling business investment and profitability have resulted in job losses.

Major employers in the county, including BOC Edwards, Ericsson, Glaxo-SmithKline, Lec Refrigeration and Bowthorpe EMP, have all announced job losses and cut backs.

Mr Brooker said the worst may be yet to come.

He said: "Since the start of the year UK industry has witnessed the foot-and-mouth disease and the technology and telecoms crisis.

"The prospects for this year are not encouraging, the fundamentals have not changed since the turn of the year. Key economic indicators, such as manu-facturing output, producer input prices, business investment and the balance of payments have all deteriorated.

"If domestic demand is not brought under control and the Bank of England raises interest rates towards the end of the year, there will be very little scope for the manufacturing sector to avoid falling deeper into recession."

Inflation, unemployment and retail sales figures, all due out this week, are all forecast to point to a slowdown rather than a recession.