Business confidence is increasing across much of the economy, although some parts of industry remains "mired in difficulties", according to a new report.

Service and manufacturing firms were more confident about the future, but retail and tourist companies were feeling the strain of the slowdown in consumer spending, said the Institute of Directors.

Director general Miles Templeman said: "Disparities in the performance of certain sectors of the economy are clearly emerging.

"The slowdown on the high street is now very apparent, but, against all odds, manufacturing is showing green shoots of recovery. However, it is far too early to say if this pick-up will be sustained."

A survey of 500 firms by the IoD showed that one in three were optimistic about future trading.