Small businesses in Northern Ireland are considerably more optimistic about their future than their counterparts south of the Border.

According to Ulster Bank's first all-island business confidence survey, 63 per cent of small to medium-sized (SME) businesses in the North expect to achieve a stronger performance in the coming year.

This compares to just 50 per cent of SMEs in the Republic expressing confidence about their business prospects for the year ahead.

In fact, 15 per cent of southern businesses predicted that their situation would deteriorate over the next 12 months.

Close to half of these respondents cited competition as their main concern.

The economy and interest rates were also cited as causes of pessimism.

In comparison, just 8 per cent of Northern companies expect their performance to worsen over the next 12 months.

The level of business confidence in the Republic varied significantly by region.

Companies in the mid-east counties of Kildare, Meath and Wicklow were found to have the highest level of confidence about their current and future performance.

The survey also indicated that, in general, business expectations are more positive over the medium term.

Over 70 per cent of all businesses, both north and south, expect their operations to grow in the next two to three years.

More than half indicated that they would have to hire more employees in order to achieve this growth.

Chief executive of Ulster Bank corporate markets Robert Gallagher said yesterday that the survey revealed a great sense of optimism about future expansion.

"Companies south of the Border will be striving for growth by entering new markets and introducing new services, while companies north of the Border plan to grow by increasing their sales to their existing market," Mr Gallagher says.

"Overall, we can see a clear picture that Irish businesses intend to hire more staff and to continue to grow."