The UK's small and medium sized enterprises (SMEs) are confident about the opportunities for the next year, but reluctant to invest in growth, according to research by Baker Tilly.

Data from the firm's Your Business Outlook 2014 shows that 45% of SMEs are confident about growth opportunities for their businesses over the next 12 months, with almost half expecting to increase turnover by 5% or more. However, 96% of respondents said they were content with their current levels of success and 84% were not prepared to take on more debt to expand.

SMEs in London were most optimistic, with 62% confident about their prospects for the coming year, with businesses in the Midlands the least confident at 39%.

Despite overall optimism, only one in five said they planned to take on new staff in the next 12 months, 20% planned to increase their capital expenditure, 23% planned to increase sales and marketing spend, and just 16% planned to up their R&D spend. An overwhelming majority (90%) said they had no plans to use any of the main tax incentives being offered by the government to SMEs.

Neil Sevitt, Baker Tilly partner and SME specialist said: 'There is real concern that if SMEs do not take a long-term view and ignore opportunities for investment and expansion, economic recovery will remain hesitant and uneven. Businesses need to take more courageous and strategic decisions and make the best use of tax incentives and government assistance available to them.'