The chairman of a regional newspaper publisher has claimed that government spending cuts are having a “damaging” effect on business despite a rise in profits for the first half of the year.

Regional publisher Archant turned in a total operating profit of £7m for the six months to July 3, up £2m on the same period in 2009.

In the same period, total revenue declined by £700,000 to £70.1m – a fall of 0.9pc.

But chairman Richard Jewson sounded a warning note about the potential impact of the ruling coalition’s cuts programme on the figures for the second half of 2010.

He said: “Our management have continued to exploit the opportunities presented by the changing trading environment whilst reducing operating costs by 4.1pc, preserving cash and seeking new ways to develop our digital businesses.

“The spending cuts announced by the new government have already damaged business sentiment. We continue to pursue process efficiencies whilst seeking new revenue opportunities in print and online by developing new products and services to meet the changing needs of our customers.”

Most of the increase in profits came from the newspaper and printing division, with operating profits standing at £6.3m compared to £4.2m in 2009. Profits in the magazine division were up £0.2m.

The past six months have seen a period of expansion from Archant with the acquisition of Kent publisher KoS Media, the launch of new title Cambridge First and re-launched magazine titles in Leicestershire and Nottinghamshire.