Over 40 percent of small businesses are pessimistic about a potential economic recovery, according to the new survey released on Thursday.

The Business Confidence Survey found significant region variations across the country, with 61 percent in the East Midlands and 49 percent in the North West gloomy about the year ahead.

The picture was brighter in the South West, with 35 percent of small firms extremely positive, describing conditions as the brightest they had experienced in five years against a national average of just nine percent.

Small businesses in the East of England and the North East were more positive than much of the UK, with 73 percent and 61 percent respectively feeling that conditions are stabilising after a hard couple of years, against a national average of 49 percent

"What we've seen is that there are some dramatic variations across the country in terms of business outlook," said Jonathan Elliott, managing director of business-only comparison service Make It Cheaper which commissioned the survey.

"On the whole the view seems to be that the economy is stabilising but small businesses are still rightfully cautious and are focused on managing and controlling costs."

Steve Jackson of beatmydebt.com commented  on the survey saying it painted a gloomy picture for many. "Small and medium sized businesses employ a huge number of people. If they are not able to grow creating the opportunity for wage increases and new jobs, many individuals will continue to struggle financially" he said.

The poll was carried out by Redshift, who interviewed 500 people working in small businesses.