Financial and property experts in Oxfordshire are predicting a general recovery in the economy.

Local property agents are predicting growth in both the manufacturing and service sector, which has led to expectations of higher tenant demand and rental growth.

Meanwhile, the number of business start-ups has increased for the second quarter in a row according to recent research by Barclays.

In the first three months of the year, the bank's Small Business Survey found 95,300 new businesses started trading in the UK while 99,700 closed down -- eight per cent fewer than last year.

Karl Bushell, head of small business for Barclays in Oxford, said: "For the first time since September 2000, we have tangible grounds for optimism for start-ups when looking at the number of mainstream businesses. "It seems that the economic slowdown may have delayed but not deterred people putting their plans into action. I expect to see numbers continue to rise over the next three to six months, provided interest rates do not rise dramatically.

"The economic outlook is more positive and small business owners are clearly sharing that optimism."

The number of new businesses started in the Oxford post code area in 2001 was 3,100 -- nine for every 1,000 adults of working age -- below the national average of 11 per 1,000.

Meanwhile, demand for commercial property generally slowed in the first half of the year due to dwindling business confidence and the after-effects of September 11, according to a report by the Confederation of British Industry and property advisers GVA Grimley. But demand is expected to improve during the next six months, with 25 per cent of firms saying they were likely to increase their holdings.

The findings have been supported by the Oxford office of commercial property agents Lambert Smith Hampton, which says business confidence is at a 16-month high.

Better growth in the service sector should support activity in distribution, boosting demand for warehousing space, while strong consumer spending is expected to lead to demand for new accommodation.