Small and medium businesses are turning to technology to mitigate rising costs and remain competitive, according to a new report from Barclay’s Bank.

Despite rising interest rates and challenging market conditions, the research found that businesses investing in innovative technology are on average spending nearly half of their annual revenue when doing so.

About 45 per cent of businesses are investing in technology to increase their productivity, while a further 44 per cent are doing so to futureproof their business.

Around two thirds of retail SMEs are open to embracing new technology, while 41 per cent have dedicated technology teams within their business which employ an average of 13 people.

Barclays said that 57 per cent of the SMEs it monitors reported an increase in revenue in the latest financial quarter, the highest figure in 18 months. Around two thirds of SMEs believe this trend will continue and predict profit will rise in the coming year, said the bank.

Colin O’Flaherty, head of SME at Barclaycard Payments, said: “It’s promising to see that SMEs are feeling more optimistic about revenue growth and are eager to invest in cutting-edge technology to future-proof their companies.”

He added: “Small businesses are vital to the UK economy and play a key role in supporting employment, so the employee growth projections are also really encouraging for both business stability and economic prosperity.”

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