OPTIMISM for UK businesses has increased in the last quarter, according to a survey.

The latest CBI Quarterly CBI trends survey showed 25 per cent of small and medium-sized businesses said they were more optimistic about the state of business in the UK, whilst 21 per cent said they were less optimistic, giving a balance of plus four per cent.

The survey of 423 firms, covering the three months between July and September, found volume of output was up by a net balance of 10 per cent in that time, whilst companies expected it to increase at a similar rate in the next quarter – plus eight per cent.

Optimism about export prospects over the year ahead grew at the fastest rate since April 2014, at a net balance of plus 24 per cent.

However average unit costs are rising at their fastest rate for more than three years, and are expected to continue to increase over the next three months, according to the survey.

Numbers employed have grown for the fourteenth consecutive quarter, but at the slowest pace in almost two years.

The survey also found an improvement in investment intentions, following a deterioration in the wake of the EU referendum, although concerns over labour shortages limiting capital spending have risen, to levels similar to those seen at the end of 2007.

Rain Newton Smith, chief economist at CBI, said: “Smaller manufacturers are increasingly confident about their export prospects in the months ahead as they continue to reap benefits from the weaker Pound, but this is also leading to a rise in costs at home.

“While investment intentions have improved, uncertainty among businesses remains high, and so the Government must prioritise measures to ensure that firms keep investing ahead, like removing new plant and machinery spending from business rate calculations.

“Setting the right environment for firms to innovate must be at the heart of the Autumn Statement, so the Government should commit to a long-term target for research and development spending of 3 per cent of GDP, getting behind Innovate UK and our catapult centres.”