SMALL and medium sized enterprises (SMEs) are struggling to keep positive, a study by Southampton-based business the Hilton-Baird Group warns.

Its latest SME Trends Index found just 33 per cent of business owners and finance directors expected their company to expand in the next six months. The respondents stated that generating new businesses would be their primary concern in that period, as reported by 33 per cent, followed by managing cash flow at 18 per cent and the rising cost of fuel and raw materials at 16 per cent.

This is despite the survey indicating that the financial health of UK businesses reached a two-year high during the six months to October 2012.

Using a range of factors such as turnover, profitability and bad debt levels to calculate an overall Business Health Index, this headline figure rose to 0.84 in October 2012.

This is up from 0.54 just six months earlier and represents the highest score since the survey began in November 2010.