Hopes for a bounce-back in small business confidence have been dashed in the latest quarterly survey of business positivity from the Federation of Small Businesses (FSB).

The lobby group's first quarterly confidence report for 2023 tracked a sudden upsurge in business confidence but the latest results indicate the momentum was short-lived.

The new figures for the South West - taken after FSB members and guests took part in the survey in the first week of July - reveal confidence has dipped again slightly.

Sam Holliday, Gloucestershire FSB's development manager, said: "The overall picture is still one that reflects the concerns that the economic situation remains very difficult for many small business owners and the self-employed."

However, he added: "Despite the headline fall in confidence - mainly cited by SMEs as because of the general economic situation, sluggish consumer demand and rising costs - there were still some positive signs that small businesses do feel the situation is going to approve."

Nearly half of the SMEs surveyed in the South West said that their growth aspirations in the next 12 months were to grow "rapidly or moderately" - a steep increase in the last quarter - and nearly one in five planned to increase headcount in the coming months.

FSB regional policy chair Craig Carey-Clinch said: "The reality is that business confidence - like the economy that influences it - is just in a totally uncertain place. All we can hope is that some of the positive signs we are seeing can be built on and increasing confidence can start to become the norm again rather than the exception.

"We at FSB will continue to work hard with leading policy makers to stress that small businesses can and will do their bit to try and get things moving forward again but they can't do it alone. Pro-small business policies are essential to get SME confidence firmly back on track."

The regional figures were released as part of the overall national FSB confidence report for the quarter which saw a more dramatic fall in confidence than has been seen in the South West.

Martin McTague, FSB's National Chair, said he too was trying to focus on the positives in the report.

Mr McTague said: "Although the upturn in small firms' confidence from the first quarter didn't carry over into the second quarter of the year, the message from our research is that small firms' confidence in the future is looking rosier.

"Given the right conditions for growth, small firms have the potential to power a groundswell of economic activity. With the domestic economy the biggest perceived barrier to growth, however, they are in something of a catch-22 situation."