PROFITS earned by major British companies are still well down on levels before the recession and show little sign of improving, according to a new report.

CCN Group in its latest health cheek of British companies claims that corporate profitability peaked in the second quarter in 1995 and has not moved since.

It says profitability is still just two thirds of pre-recession levels.

"There have been too many false dawns over the last three years, with confusing and contradictory signals coming from, many different commentators, says Mr David Coates, director of CCN Group, the global information services organisation.

"Manufacturing industry technically moved back into recession after two quarters of falling output earlier this year trade with the European Union is in decline without being compensated by exports outside the EU and the current cut price consumer boom is not sustainable.

"Even retail sales give little cause for optimism, given their volatility and tendency to suck in imports rather than home produced goods."

Mr Coates emphasised that on the one hand interest rates were low, the building society sector was marketing itself aggressively and consumers had returned to the high street.

"But fundamentally, the last six months show that the UK's major 1,000 companies have experienced little growth in real profitability.

"Moreover, consumer led growth at best simply sucks in imports and more often than not, leads to rapid corrections in interest rates."

Among the regions, the most successful at raising profitability has been the East Midlands where the average return on capital employed has grown by almost half to 16.1 per cent over the last year.

The East Midlands is at the top of the league for attracting inward investment, much of it in the engineering sector.