SMALL businesses in the South West are on their way up, according to a new report.

For the first time in 18 months the survey, conducted by NatWest, found that more than a quarter of the respondents reported significant improvements in their sales. But Government red tape still appears to be holding many firms back.

Agriculture, business services, retail and personal services are the sectors worst hit, with more than 15 per cent claiming it is the number one problem.

Despite this, Jeremy Peat, the bank's chief economist, said the future is looking rosier.

"This positive view form the UK's small business sector is extremely encouraging," he said.

"It is also consistent with mounting evidence of a broad-based global recovery and a return to strong, above-trend growth in the UK."