The majority of the UK’s SMEs are bullish about their prospects in ‘the worst recession in living memory’, according to new research from business insurance provider Hiscox.

More than half (54%) of UK SMEs report that they are confident their business will survive the downturn and almost half (48%) claim that they have taken no additional measures to ride out the downturn.

Among those who have taking action to survive the downturn, almost nine out of ten (88%) reported that they have not enforced salary cuts, while 87% have continued with bonus payments. Furthermore, more than four in five (85%) have made no cuts to entertainment budgets and eight out of ten (82%) are continuing to spend the same amount as previously on office maintenance.

The report also reveals that, unlike larger companies, the UK’s small businesses have also for the most part been able to avoid redundancies, with less than one in ten (9%) opting for layoffs.

Alan Thomas, small business insurance expert at Hiscox UK, said:

“SMEs are an integral part of the UK’s business landscape and an important indicator of the health of the national economy, so it’s good to see that many are so confident about their survival prospects and have avoided some of the more difficult measures such as salary cuts and redundancies.”

But despite this seemingly confident outlook, the report found that the majority of SMEs think the recession will continue beyond 2009, with only 7% of the belief that the economy will improve by the end of this year. In fact, 45% don’t predict a recovery before September 2010, while an even more pessimistic 23% believe Britain will be mired in recession until 2011 or beyond.