Small firms are predicting rising sales and profits amid an increase in confidence fuelled by hopes of growing exports, according to a report.
Banking giant Lloyds TSB said a survey of 2,300 companies showed renewed optimism despite the continuing spectre of weak domestic demand.
Business confidence was at its highest level since 2007, driven by the promise of growing exports as a result of a “rebound” in world demand for goods and a sustained fall in the pound, said the report.
The biggest worry among smaller firms was falling domestic demand, with more than half of those surveyed saying fragile domestic markets were their greatest concern.
John Maltby, managing director of Lloyds TSB Commercial, said: “Business confidence is on the turn. After such dramatic lows, this revival is a real sign that businesses are genuinely hopeful for the future, and it is clear that many firms now see better sales and profitability on the horizon.
“But it remains a confidence tinged with caution. Concerns about home-grown demand are unsurprisingly weighing on the minds of business owners whose success depends on domestic markets.
“As long as businesses harbour doubts about the economic climate, they will hold back on investment spend and, while there’s enough momentum behind the recovery to prevent it faltering, it is likely to be a long haul.”