Fewer than half of the UK’s small and medium-sized businesses believe they will grow in 2017, new research has revealed.

A survey of 1,200 companies conducted by network provider O2 pointed to a gloomy outlook among Britain’s SMBs and start-ups, with just 46 per cent predicting 2017 will be better than 2016. Continued economic uncertainty and difficulty in retaining employees were cited among the top concerns.

In a timely message to the Government as it prepares to begin Brexit negotiations in March, small businesses listed improved trade agreements as one of their top demands.

Almost three quarters of SMBs said that they expect technology to be important for their performance but 40 per cent admitted that they preferred traditional methods of reaching customers. One in five said that staff lack skills and confidence when it comes to digital communication. A majority of the SMB owners said they need more assistance from Government to aid growth.

Larger businesses are far more confident on their future prospects than their smaller counterparts, O2 found, with 67 per cent predicting 2017 profits will outperform those of 2016.

Emma Jones, the founder of Enterprise Nation, a support organisation for start-ups said: “This research shows what we know to be true; that there is a way to go when it comes to small businesses making the most of the digital opportunity. What's required is a healthy dose of training and education.”

Ben Dowd, sales director at O2, said there was a risk small businesses could fall behind, adding that it was “vital they are equipped with the digital skills they need to remain competitive.”

The top five things that SMBs said could improve business:

1. A reduction in red tape

2. Improved access to technology and connectivity

3. Increased access to funding

4. Improve access to talent/training