The volume of businesses in the region which are struggling has fallen to a record low, suggests new research.

A new report from R3, the insolvency body, says that 66 per cent of Midlands companies are now reporting none of the key signs of business distress.

This statistic is almost triple the 23 per cent recorded in March 2012 when R3 launched its Business Distress Index

The study monitors regional fluctuations in sales, profit and market share as well as maximum bank overdraft use and redundancy levels.

The index also reveals the growth among Midlands companies remains relatively close to the high hit last autumn

R3's report said 67 per cent of the region's businesses were now showing at least one of the body's five key signs of growth, namely increase in sales, investment in new equipment, increase in profits, business expansion or growth in market share.

This figure is six points down from the record 73 per cent last October but 25 points up from 42 per cent in March 2012.

Richard Philpott, chairman of R3 Midlands and a partner at KPMG in the region, said: "The fall in regional distress levels is very encouraging, particularly when married with evidence of business growth.

"However, the path to full recovery continues to be littered with obstacles, not least a possible personal debt ‘bubble' and a potential rise in interest rates.

"While it remains significant that a third of all businesses in the region are still showing signs of distress, the good news is this latest R3 research adds weight to the idea our local marketplace is becoming healthier and increasingly confident about its prospects."

R3 is the trade body for insolvency professionals and represents 97 per cent of the UK's insolvency practitioners.