The study suggests there was a swift return to growth as restrictions eased at the end of the first quarter.

The latest NatWest UK Small Business Recovery PMI survey, which monitors the performance of businesses with between one and 49 employees, found that the headline All-Sector Small Business Activity Index rose from 46.7 in February to 55.8 in March.

This compared with a low of 40.5 at the start of national lockdown in January. Any figure above 50.0 indicates growth.

The recovery was led by small firms in the construction sector, with output among small firms rising at the fastest pace since June 2001.

Expectations for the year ahead are the highest in London and its surrounding regions, closely followed by the North of England which also saw a trend in expanding workforce numbers.

Andrew Harrison, Head of Business Banking at NatWest, said: “The end of the first quarter saw small business activity bounce back for the first time since last September.

“These headline stats are a positive read as small business optimism for the year ahead hits an all-time high. However, we know that there are still challenges for the UK’s small businesses at a sector and regional level as, for example, supply chains for small manufacturers are causing upward costs pressures and small business optimism is being led by London and its surrounding areas.

“This data reinforces the findings from our recent SME Recovery Report and is why we committed £4bn of support to SMEs outside of London.”