Firms remain optimistic about their financial prospects even though business output has fallen back, a new study shows.

Research by business advisers BDO LLP found there had been a fall in manufacturing and services output in March.

But strengthening household finances was helping to maintain a positive outlook for companies, said a report.

Peter Hemington, of BDO LLP, said: "The optimism of both the manufacturing and services sectors is encouraging for the health of the UK economy in the face of underwhelming business output.

"Weathering a string of shocks to the UK economy, which include a slowing Eurozone and continued geopolitical uncertainty, comes down to good management from business leaders.

"Expectations for a Bank of England interest rate rise this month now look increasingly remote, but well-managed businesses will still be looking for ways to insulate themselves against further shocks."