A senior Midland business leader has said firms are “right to be optimistic” after research showed they were taking the weak economic outlook in their stride.

A survey of 1,000 business leaders by the Institute of Directors showed despite what a majority assess to be a “moderate risk” of recession this year, businesses appear to be relatively optimistic about their own prospects, with 50 per cent expecting higher or much higher revenues in 2012 than in 2011.

Profit expectations are also positive – 40 per cent of companies expect profits will increase in 2012, compared with 32 per cent who expect they will decrease.

John Rider, West Midlands chairman of the IoD said: “The resounding message from the survey is the critical role of confidence at this stage in the economic cycle.

“And to that extent it is very much in line with our campaign here in the West Midlands, launched last month, to seek out ‘reasons to be cheerful’.

“If the euro-crisis stabilises, confidence could return relatively quickly and companies could dust down business investment and recruitment plans put on hold last year. Let us hope that proves to be the scenario. Business is doing better than many give it credit for. I believe we are right to be optimistic.”

Despite the outward confidence, the research showed firms are hedging their bets on investment and jobs – 27 per cent of companies think business investment will be higher this year but this is exceeded by the 29 per cent who think it will be lower, while 27 per cent reckon employment will be higher this year against the 25 per cent who think it will be lower.

The key source of economic concern remains the danger of a euro break-up.