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Entrepreneurs are looking to downsize, sell or close their firms at a rate not seen in years, a survey has suggested.

The Federation of Small Business (FSB) found that 13% of respondents were looking for ways out of their business, the highest percentage since it began measuring in 2012.

The survey also indicated that optimism among small firms had tumbled.

The FSB blamed the fall in optimism on rising costs and a weaker UK economy.

"A record proportion of business owners currently expect to downsize, sell or shut up shop, while rent and taxation are frequently mentioned as causes of increased costs. We need to see more support in this space - that includes ending enforcement of the ridiculous 'staircase tax'," said Mike Cherry, FSB National Chairman.

The term "staircase tax" emerged when some firms found they were paying extra business rates because they had an office divided by a staircase.

The FSB's Small Business Index is based on a survey of 1,230 of its members and was last conducted in July - the responses were used to create a weighted index.

In July, the confidence index fell to 1 from 15 in the previous quarter. The lowest levels of confidence were seen in retail and entertainment firms, according to the FSB.

Exporting happiness

However, the FSB noted that confidence has been rising among exporters, with 40% reporting an increase in overseas sales.

Exporters have been boosted by the weakened pound, which helps make their products more competitively priced overseas.

The report also indicated that, overall, small firms are looking to increase their workforce.

"Employment intentions are up, but so too are labour costs. This is causing significant problems in a number of sectors, not least hospitality and retail," Mr Cherry said.

"With conference season and the Autumn Budget approaching, policymakers have an opportunity to restore optimism."