More than six in 10 small businesses are expecting to grow in 2015, with firms planning to recruit more staff and increase export activity, according to new research.

A report by the Federation of Small Businesses (FSB) shows 62% expect to grow in the first quarter of 2015 and while confidence is slightly down on previous quarters, productivity rose 1.1% during the second half of 2014.

Productivity increases are important to the economy because they relate to pay rises for company employees. Loosely speaking, the more productive a workforce the better it gets paid.

In other findings from the report:

- Some 16% of small businesses took on new employees during the last quarter compared with one-in-10 who cut headcount.

- The number of bosses saying finance was a barrier to growth has risen to 22% from 10% one years ago.

- London, the West Midlands and Eastern England experienced the biggest increase in confidence year-on-year.

- IT businesses were the most confidence overall, although optimism is growing fastest in the health, social work and transport sectors.

John Allan, FSB national chairman, called on MPs to support small businesses in the New Year: "There are signs that more support could be needed,” he said.

“The perception of increasing cost of finance, and further warnings of a downturn on the continent, demonstrate that Ministers need to continue to do all they can to support small firms.

“Building on extensions to schemes like Funding for Lending, the Employment Allowance, and recently improved business support programmes are crucial to this."