Salaries at small and medium sized businesses increased 1.2 per cent during 2013 while total business investment went up 2.4 per cent in the same period, according to new data.

Aldermore Bank's quarterly SME Monitor, compiled by the Centre for Economics and Business Research (CEBR), revealed a positive outlook for SMEs last year.

An index of confidence contained in the report more than doubled over the year, from plus-16 in December 2012 to plus-39.7 a year later.

Aldermore Group commercial director Mark Stephens said: "The rising levels of confidence and improved wages show that the economic recovery in the UK is really starting to pick up pace.

“Slowing demand from emerging economies is helping to reduce pressure on commodity prices and the cost of physical inputs is falling back, helping to control the rise in SME cost inflation.”