More must be done to help small businesses to grow, as they are vital to the economic recovery it has been claimed.

With the private sector expected to absorb the job losses created by public spending cuts, small firms will need help to allow them to take on extra staff such as IT contractors, according to Emyr Williams, director of Bytestart.co.uk.

"As the bloated public sector is shrunk it’s vital that small businesses are there to provide employment and stoke the engine of the economic recovery," he said.

Mr Williams also says that business owners tend to remain positive, seeing opportunity in the depth of recession, yet it is still incumbent on the government to help to maintain confidence levels with their policymaking.

According to Bibby Financial Services' latest report, the majority of small firms (72 per cent) feel positive about their current trading conditions, despite business output dropping by 12.4 points during the second quarter of 2010.