Entrepreneurs are starting the new year in a confident mood with 88 per cent expecting their business to be better off or remain the same during the coming 12 months.

A third of entrepreneurs plan to recruit additional staff over the coming year, while 38 per cent also say they will put more money into their business - a quarter by more than 10 per cent, according to Bank of Scotland Business Banking.

At the same time, 62 per cent of small business owners said they remained confident in the UK economy, up slightly from when the survey was last carried out in September.

Out of 1,078 owners and managers questioned duiring the last two months, six out of 10 small business owners also claimed it had become more difficult to run their business during the previous five years, 26 per cent of whom said it had become much more difficult.

Kevin Gillett, head of Bank of Scotland Business Banking, said: "Almost without exception, the UK's entrepreneurs believe their businesses will fair better over the next 12 months. Their confidence in the economy is clearly running high."

"Coupled with almost unprecedented increases in capital investment and strong recruitment intentions, small businesses are clearly gearing up for a strong performance in 2006."

:: The Opinion Research Business questioned 1,078 owners and managers of small businesses in England, Scotland and Wales between November 25 and December 14.

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