The Forum of Private Business (FPB) has challenged the findings of government research which suggests small businesses are experiencing steady progress by citing other, conflicting findings.

According to statistics revealed by the Department for Business, Enterprise and Regulatory Reform, 65 per cent of small organisations with employees reported they had ambitions to grow, while nearly half stated they were producing new products and services.

In contrast, research conducted by the European School of Management (ESM) has claimed that such firms are in decline, with the proportion of small companies achieving a turnover in excess of £1 million in their first five years declining from 29 per cent in 1998 to 16 per cent in 2006.

"Entrepreneurs are, by their very nature, ambitious. However, this alone does not amount to progress or growth," stated FPB chief executive Phil Orford.

He added: "The ESM’s research suggests that the situation is, in fact, becoming much harder for small firms."

With campuses in Paris, London , Madrid, Berlin and Turin, the ESM is an international business school.