SMALL and medium sized enterprises in Scotland expect to achieve strong growth in coming years with around one in five expecting to take on staff, research has shown.

A survey of SMEs for Santander bank found firms in Scotland expect to grow turnover by an average 38 per cent in total over the next five years. The result is in line with the UK average.

The findings suggest confidence has increased among SMEs as the economic recovery has continued over the last year. Firms have become more international in their outlook in spite of problems in the Eurozone.

Eighteen per cent of respondents said they were looking to hire new staff. The same percentage described international expansion as their ultimate aim.

Last year’s survey found only 12 per cent of firms wanted to recruit while six per cent had international ambitions.

Graham Silcock, regional director for Scotland with Santander’s corporate and commercial arm, said: “It’s extremely encouraging for Scotland that SMEs, the lifeblood of the economy, are predicting such a strong level of growth over the next five years. We are particularly encouraged to see that international expansion and hiring new staff are two key aims for business leaders.”

The survey found firms in hospitality and leisure were the most optimistic, forecasting they would increase turnover by an average 99 per cent in total. Retailers ranked second predicting 85 per cent growth.

Firms in construction, manufacturing and IT and telecoms expect growth of 27, 19 and 15 per cent respectively.

YouGov surveyed 1018 companies in the UK with up to 249 employees for Santander in July.