Small businesses in the UK are put off from employing staff because of the burden of increased regulation, according to a new report by the Federation of Small Businesses (FSB).

The FSB report shows that only one in five employers feel confident about employment law, and many are put off hiring by what they consider to be excessive regulation.

The report also reveals that the number of sole traders and entrepreneurs who work on their own has increased over the last decade while the number of micro-businesses (those with nine staff or less) has fallen.

Therefore, while the small business sector is growing the number of staff employed by the sector is actually decreasing

"The figures show that regulation is a real burden for employers who cannot keep up with more and more complex law and red tape," said FSB chairman John Walker.

"With more and more entrepreneurs appearing to want to go it alone, we are seeing fewer very small companies actually doing what they do well and employing people, which is a real loss to the economy."