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Confidence among British businesses has remained stable since May - the first time it has not gone down since April 2007, a poll finds.

The Bank of Scotland's Small Business Confidence index is based on the optimism of businesses regarding economic conditions, consumer demand, predicted turnover, recruitment intentions and the ease/difficulty of running a business.

It found 77 per cent of SME owners expect economic conditions to worsen over the next year, compared with 83 per cent in the last quarter.

However, 17 per cent of entrepreneurs believe now is a good time to be running a small firm, compared with 21 per cent in the second quarter.

Optimism regarding staffing levels and growth expectations were also down, with the construction industry faring particularly badly.

Peter Wood, head of strategy and products at Bank of Scotland Business Banking speculates: 'With confidence levels remaining low but stable, it appears that Britain's small business owners feel that business conditions may already have reached their lowest point.'

Figures from the British Retail Consortium show that retail business owners have seen sales during August down one per cent on the same period the year before.

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