The Confederation of British Industry (CBI) said that while the majority of businesses believe that output will steadily increase again over the next quarter, optimism continues to remain low.
Indeed, the SME Trends Survey revealed a balance of -12 per cent of firms feel optimistic about their business situation in the three months to October, while confidence on export prospects also fell.
Lucy Armstrong, chair of the CBI's SME Council, said small businesses will be "disappointed" with the slide in demand over the last three months.
"There are some signs of improving prospects going forward, with firms expecting to increase output slightly in the next three months and more positive investment intentions," she explained.
"But, the economic climate clearly remains tough, with businesses exposed to subdued conditions both at home and in our major export markets."
Meanwhile, a survey by the Federation of Small Businesses revealed that a quarter of small firms are still unaware of the introduction of Real Time Information.
Posted by Thomas Fletcher