DORSET’S economy is in “good but not great” shape and the county needs to improve its productivity, a report has said.

The second Business Intelligence Report from Bournemouth University found anecdotal evidence of increasing demand this year and a post-election bounce.

But there was concern about the possibility of a referendum on Britain’s membership of the EU, with some businesses holding back in investment in the UK.

“Nevertheless, the overall mood is about the problems of success – finding skilled staff, good premises and developing new markets – rather than hose of failure – poor orders, products and strategies,” said the report by Professor Nigel Jump.

Although the county was a “relatively prosperous” area, it faced productivity problems along with the rest of the UK, Professor Jump said.

“If Dorset is to grow faster and sustain higher living standards, its productivity needs to improve and innovation will be a driver of that,” he wrote.

He added: “The gap in our knowledge is exactly why the UK as a whole, and Dorset in particular, is not as productive as our international peers. This is linked to relative investment, competitiveness and skills, as well as innovation – all factors that are hard to untangle empirically.”

He added: “Overall, our analysis of all the recent evidence points to a Dorset (and hinterland) economy that is good but not great. It should grow in the near future but may see demand tending to moderate over the year ahead.

“For the longer term, the theme remains one of doing well but could do better.”

The county needed to seek more value from investment, entrepreneurship, innovation and skills and foreign competitiveness, he said.

The report said Dorset had 30,420 small and medium sized enterprises (SMEs), 90 per cent of which had fewer than 10 staff. Between them, they employed 152,000 workers and generated turnover of £14m a year.

Professor Jump said: “This second report sheds further light on the state of Dorset’s economy, which is actually quite healthy and experiencing something a positive bounce following the recent general election. This latest briefing suggests that, given the constrained macro environment, the key to the success of Dorset businesses will be in an innovative approach to market development.”