British businesses are optimistic about their performance over the coming year, according to new research.

The February edition of the Lloyds TSB Business Barometer indicates that 69 per cent of companies believe they will increase their activity over the course of the year, while three per cent believe business will go down.

Trevor Williams, chief economist at Lloyds TSB Corporate Markets, said: "UK businesses have good reason to be optimistic.

"Over the coming 12 months we can expect to see the UK economy gaining strength, with the possibility that GDP [gross domestic product] could rise by around three per cent after posting an increase of 2.7 per cent in 2006."

He said that the growth was largely due to a robust export market to Europe, as well as a "boom" in business investment and consumer spending.

The Lloyds TSB Business Barometer is produced monthly with data from more than 200 companies which have more than £1 million turnover.