The economic gloom affecting the UK economy appears to have lifted for many entrepreneurs, with 80 per cent of small businesses confident that their companies will grow significantly over 2004, new research has revealed.

In a survey of small firms from across the UK, Bartercard also found that 65 per cent of respondents expected trading conditions for small firms to improve this year.

This latest piece of good news will add further to widespread hopes that the economy will recover significantly over the next 12 months, following encouraging data from a range of sectors.

Bartercard said that the survey showed that there is a “growing confidence and vibrancy” in Britain’s small business community, despite the economic downturn that has affected most industrialised nations over the past 18 months.

According to the study, 70 per cent of those quizzed felt that their size was an advantage over larger companies, with many believing that the red tape and slow-moving culture of large corporations harmed new product development, marketing and customer service.

Ian Jones, chief executive of Bartercard, said that smaller business are refusing to be held back by traditional constraints.

“Many are expecting to hit their own growth targets regardless of what may be happening around them. Companies are still being cautious, but not letting that caution temper their greater ambition.

Clearly big players have distinct advantages, mostly in terms of financial support. However, in many cases that is becoming less vital and importance is transferring to ‘personalised’ services that can react quickly to commercial situations,” he said.

In a separate study, the Confederation of British Industry (CBI) announced more good news by revealing that financial services companies’ profits grew at their fastest rate for three years last quarter.

The CBI’s latest quarterly survey also found that staffing levels increased for the first time in a year at the end of 2003, while business volumes and optimism increased for the third consecutive quarter.

Ian McCafferty, chief economist at the CBI, said: “Rising share prices and the recovery in the wider economy at home and abroad are underpinning the continuing revival in financial services.

“Both sentiment and activity are now on a clearly rising trend, as the recovery takes hold.”