Small businesses are creating jobs for the first time in three years as confidence returns to the majority of sectors and regions in the UK

Business optimism is returning across the UK, with a greater number of firms looking to recruit staff and invest their hard-earned cash.

The latest confidence index from the Federation of Small Businesses (FSB) rose to 33.5 in the third quarter, double the score in June and representing the third successive quarter of growth.

More companies are now looking to take on staff than reduce their workforce for the first time since the report began in 2010, while 21% of firms are planning to increase their level of investment over the course of the next 12 months.

The findings offer more evidence that the economy is beginning to turn a corner - positive news for businesses and the general public alike.

"Optimism, growth and confidence can be used to summarise this quarter's findings," commented FSB chairman John Allan. "Small firms are clearly helping the economy gain momentum compared to the same point last year.

"This is the most positive report that the FSB has published for some time and gives further confidence to policymakers and the Government that steady growth is back on the agenda. This now needs to be fostered and the Autumn Statement later this year should be the ideal vehicle to do this."

Financial and business services reported the highest levels of confidence, as did technology companies. However, those in the leisure and entertainment sectors were less optimistic as household spending power remains squeezed.

Optimism picked up in nearly every region across the UK, with London unsurprisingly enjoying the highest score of 46%.

Northern regions, in comparison, were much more pessimistic while the north-east experienced a significant decrease in confidence.

FSB members, of which there are around 200,000, reported that inflationary pressures have eased as just over 60% said that the cost of doing business had increased in the quarter, below the peak of 75% in late 2011 and below the last three quarters.

Firms are also seeing cheaper finance but the FSB said there has been little year-on-year movement in the percentage of companies applying for credit.

Copyright Press Association 2013