Small and medium-sized companies in the UK are feeling more confident about their business prospects than at any time since April 2007, according to data released by Confederation of British Industry (CBI).

The CBI said that while more SMEs had actually seen demand for their goods fall than rise over the past quarter, trading was improving and businesses were feeling increasingly optimistic.

Of over 400 firms firms surveyed, 9% more felt very optimistic about their firm's general situation, the best figure revealed by the quarterly survey for two-and-a-half years.

"It is good to see that both small and medium-sized firms feel more positive about business prospects than they have for two and a half years, and hope that orders will stabilise in the coming three months," said Russel Griggs, chairman of the CBI's SME council.