Optimism grows that the worst of the recession is over

However, the optimism is tempered by concerns over a perceived high level of business taxation, revealed this year's Baker Tilly Owner-Managed Business (OMB) Survey.

The survey shows that reducing the cost and complexity of taxation has been identified as the main priority for the next Government.

Owner-managers are, on the whole, much more optimistic about business prospects than this time last year.

While last year's OMB survey showed that only 19 per cent of businesses in the region predicted sales would increase, this year's survey reveals this figure has increased to 61 per cent.

Baker Tilly said this was a clear indicator of a consensus emerging that the worst of the recession is over.

The survey of 200 board directors of companies across all industry sectors with turnover of up to 50m revealed that 89 per cent see the tax burden as a threat to growth, while 67 per cent regarded tax complexity as a problem.

Of those surveyed, 72 per cent anticipated an increase in operating profits over the next year, while 50 per cent of businesses said access to credit was still an area of concern.

Richard King office managing partner at Baker Tilly in West Yorkshire, said: "The incoming government will have to balance the sibling rivals of tax and spend – an area which our research shows businesses to be clearly concerned about.

"The new government needs to be aware of the extra sensitivity surrounding the taxation of small and medium-sized companies as they gear up to help pull the country out of recession.

"Despite the precarious state of the public finances, each party's manifesto commitments on tax play down the prospect of tax increases. Experience suggests that businesses are right to be concerned as the post-election policies rarely match the pre-election rhetoric."