DESPITE plunging stock markets, the impact of the credit crunch and the brakes going on consumer spending, Southampton, business leaders are overwhelmingly upbeat about the future.

Almost three quarters of the bosses of some of the city's biggest companies reckon the economy will either stabilise or make a slow recovery in the coming months.

That's the surprise result of a survey from city business group Business Southampton, which counts almost 80 of the city's companies as members.

The regional directors of major firms like port owner ABP, accountants KPMG, cruise giant Carnival and motor name Ford were quizzed on their thoughts and predictions for the year ahead in Southampton. Not only are they hopeful of an imminent economic upturn, but 81 per cent expect to introduce new products or services and 70 per cent said their profit forecast for the next quarter would remain the same or rise. The region's employment prospects look better than ever despite the widespread economic gloom, with almost nine out of ten (87 per cent) of firms expecting to take on more staff or at least remain the same.

It's a startlingly different picture to the recession worries plaguing the City, where earlier this week the FTSE 100 Index suffered its biggest one-day points drop since the September 11 terrorist attacks in 2001.

However, more than half of the firms recognised that the property downturn and credit crunch had made some impact on their business.

Sally Lynskey, chief executive of Business Southampton, said: "Despite predictions of a recession, businesses in the region remain optimistic for the year ahead and focused on building their business.'' Bosses also tipped the forthcoming West Quay Phase Three project as the most crucial business development in Southampton, ahead of the arrival of Ikea and the progress of the cruise industry. The survey suggested business leaders thought infrastructure and transport should be top of the list of development priorities, followed by development of the waterfront and promotion and marketing of the city.