The small-business sector in Northern Ireland has experienced growth in sales and employment in the past two years, according to a new report.

Lifting the Barriers to Growth, a report from the Federation of Small Businesses, concludes that the sector is strong and confident despite past difficulties.

The report follows themes explored in the first edition published in 2000.

Despite a slowdown in the economy over the intervening period, more than half of all respondents to the survey stated that their sales volume had either gone up (50 per cent) or gone up considerably (12 per cent) over the past year.

The report is the result of an eight-page questionnaire completed by 290 companies.

While in excess of half of the respondents reported that employment had remained static in the past year, 33 per cent reported a growth in employment levels. Growth was highest among new businesses.

In terms of trading, 34 per cent of firms said they were engaged in international trade mainly with the EU, higher than the national average.

However, trading with non-EU countries was found to be below the national average.

The report also revealed that nearly one-third of all training undertaken in the sector was related to exporting and international trade.

Only 19 per cent of firms were satisfied with local training generally, suggesting a need to address the lack of qualifications in the current workforce.

Those surveyed reported dissatisfaction with finance and banking issues, referring particularly to the high cost of services such as overdrafts and loans.

The report suggests there is a gap in the supply of finance for small firms in Northern Ireland other than conventional bank lending and more research was needed into innovative venture capital or leasing schemes.

There were also high levels of dissatisfaction about transport in Northern Ireland with those surveyed stating there was a need to improve road and rail infrastructure. High fuel costs were also highlighted.

Elsewhere, the pound to euro disparity was seen to have increased problems, placing companies that share a land border with the Republic at a disadvantage.

The report also recommends that the newly established body, Invest NI, should work at a grassroot level with the small-business community in order to improve development work.

Business development to date had been focused on job creation, it said, leading to short-term assembly line-type jobs with little opportunity for developing skills of the workforce.

The emphasis on inward investment had proved a high-risk strategy in times of global recession, it added, pointing out that inward investment had been given priority in funding over indigenous enterprises.

"For the future, this balance has to be looked at more critically," it says.

Responding to the report, the Minister for Enterprise, Trade and Investment, Sir Reg Empey, said it was his hope that Invest NI and the launch of the Northern Ireland Business Support Partnership tomorrow would signal the beginning of a new era of partnership between the business community and devolved government in Northern Ireland.

The partnership would provide an ideal forum where co-operation and development of mutual understanding, and the promotion of a better approach to business compliance could be achieved, according to Sir Reg.

"It is in the spirit of working together that we can achieve common goals," he added.