Small firms across the South West are feeling more confident despite facing spiralling business costs, according to the latest Federation of Small Businesses survey.

The regional confidence figures in its Small Business Index (SBI) have increased significantly in the previous quarter and nationally they have risen to the highest level in over a year.

The recovery has been spurred by increased international trade.

Eight out of 10 (80 per cent) exporters surveyed in the region stated that international sales have been steady or increased, and the same proportion expect this trend to continue over the coming three months.

The recovery in confidence comes despite a surge in the cost of doing business.

Three-quarters (74 per cent) of small firms across the region reported a rise in operating costs over the past quarter.

Fuel (36.8 per cent) and labour costs (35.9 per cent) are cited most often as the main causes of this increase, with the exchange rate (26.9 per cent) also frequently flagged up.

However, the region's firms remain optimistic about hiring new staff.

Almost all (95 per cent) small firms in the South West expect to maintain or increase their headcounts over the next quarter.

The overall confidence figures have been welcomed by Ken Simpson (pictured), the regional chairman of the FSB in Gloucestershire and the West of England.

"Once again South West businesses have shown great resilience in carrying on doing what they do best regardless of outside political events," he said.

"However, we cannot ignore the fact that three-quarters of our members in this region are finding the costs of doing business is growing and that needs to be addressed to maintain these upward levels of confidence."

FSB national chairman Mike Cherry said the survey revealed both good and worrying developments for its members.

"It's hugely encouraging to see our small businesses trading more overseas, driving an exports-led recovery," he said.

"We know that small firms that export have higher turnovers than those who rely on the domestic market, so it's crucial that the Government maximises cross-border trade opportunities for small firms.

"However, at a time of unprecedented political and economic uncertainty, small firms are being hit from all sides by mounting cost pressures.

"This month alone many have had to absorb a hike in business rates and the National Living Wage.

"Added to this, costs that have steadily risen, such as fuel, which our members are increasingly pointing to as a major cause of higher outgoings.

"The impacts of the spiralling cost of doing business are starting to show.

"The percentage of businesses seeking to grow in the next 12 months, although slightly up on last quarter, remains below the levels seen two or three years ago.

"Higher numbers of businesses also report they plan to downsize or close over the next year."

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