Paul Hill, business editorFresh evidence emerged last night that the worst of the recession and housing slump in the East of England may be coming to an end despite the rising toll of unemployment.Paul Hill, business editor

Fresh evidence emerged last night that the worst of the recession and housing slump in the East of England may be coming to an end despite the rising toll of unemployment.

New research shows that the regional economy remains in a "fragile state" with slowing industrial output and the number of people out of work at a 12-year high.

But according to Insight East, the region's economic intelligence unit, the pace of decline slowed between April and June and "business confidence and expectations were better than they have been at any time since the recession began".

While house prices in the East fell faster than the national average after January 2008, Insight East reports they are now "recovering faster" than other parts of the country.

But the unit reports that it is a lack of supply rather than rising demand that is fuelling the "modest" increase in property prices across the six counties.

Unemployment is forecast to increase in the coming months, but Insight East said "there was some evidence that the rate of job losses was slowing" between April and June.

Insight East's verdict came as the Office for National Statistics (ONS) revealed that sales of household goods on a month-on-month basis soared in July to their highest level since August 2006 - thanks to the upturn in the property market.

The ONS said household goods stores saw sales volumes rise 4.5pc between June and July.

Meanwhile, the Council of Mortgage Lenders said that home loans rose by 26pc in July to �16bn - the highest figure for nine months.

But plummeting tax receipts saw government borrowing rocket to its highest level for the month of July since records began.

Public sector net borrowing was �8bn in the month, compared to a repayment of �5.2bn in the same period last year.

The ONS said it was the first time the government has borrowed in July since 1996 and the highest figure for the month since records began in 1993.

But separate research suggests that some businesses in Norfolk are still struggling to get funding from the banks.

More than one in three firms surveyed by the economic development partnership Shaping Norfolk's Future (SNF) and the University of East Anglia's business school said renewing existing credit lines or getting fresh finance was harder now than six months ago.

Forty-five per cent of businesses who took part said arrangement fees for loans had gone up and 38pc said they had been asked to give greater security for credit.

The research also canvassed the views of banks - who said demand for borrowing was down, but none said they had turned down a request for credit because of a lack of funds.

Chris Starkie, SNF chief executive, said the research would be sent to chancellor Alistair Darling.

He added: "There is no doubt that a large number of businesses are still struggling to access finance from the banks. If this continues, it will undoubtedly slow down Norfolk's recovery from the recession.

"The banks are quite clear tat they have money to lend and are willing to lend. But it is also clear that these funds are more expensive and in many cases the criteria for lending has been tightened up.

"Banks told us they are looking for businesses to work harder at their proposals. Our challenge to businesses is to take advice on producing your business plan and give yourself the best possible chance to secure funding."

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