The latest SME confidence tracker from Bibby Financial Services has reported that the number of SMEs expecting sales to increase between April and June jumped by 13% compared with expectations for the first three months of the year, with 50% now expecting to see a rise.

The overall confidence index rose by six basis points from 58 in Q4 2017 to 64 in Q1 2018, the highest reading since Q2 2015 when the EU Referendum Bill was unveiled in the Queen’s Speech.

"It is clear that even limited clarity over Brexit – and some compromise on behalf of both the UK and the EU following recent negotiations – has had a calming effect on SMEs,” said Edward Winterton, UK CEO at Bibby Financial Services.

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“This has resulted in a marked increase in confidence, which is long overdue following two years of tumbling confidence and subdued investment.”

However, despite the rise in confidence, 43% of SMEs said that the uncertain economic environment in the UK and further questions surrounding Brexit were holding back investment over the months ahead.

Over a third of business owners (36%) would back calls for the UK to remain in the single market and customs union.

SMEs also highlighted employment issues, with 27% struggling to hire skilled workers, while 23% claimed that they had to increase wages to retain existing skills.

Edward added that with just under a year to go before the UK leaves the EU, SMEs were concerned about their ability to hire skilled workers both now and in the future.

“It is vital that UK PLC has clarity on this important issue sooner rather than later to enable investment to start to flow more freely again.

“While it is positive to see confidence return to the backbone of the economy, there are still underlying issues that could impact SMEs’ future investment and recruitment plans.

“The real learning here is how far a little Brexit progress can go in relation to small business confidence.

“Whatever comes of future Brexit negotiations, for now at least, it seems that SMEs are getting on with business, regardless.”