Britain's owners of 8.5 million dogs spend an estimated £10.6BILLION on their pets every year, according to a new report. 

The average owner splashes out £1,252 annually on their four-legged friend. 

On top of food and vet bills, some besotted owners even pay for 'pawlates' - Pilates for dogs. 

The study by American Express shows the pooch care boom has triggered a rise in the number of small businesses springing up to cater for the rising demand. 

A survey of 1,000 dog owners revealed that six in ten use small independent businesses when shopping for their pets. 

Over a quarter said they spend more money on their pets now than they did five years ago. 

The research found that, on average, owners spent £393.48 a year on dog food - the biggest single cost. 

Other necessary expenditure included insurance (£243.24) and vet bills and medicines (£73.33). 

The remaining £541.46 spent on average per pooch went on toys, professional grooming, kennels, clothing and accessories. 

Spend Avg cost 
Toys and Treats £183.96 
Grooming (shampoo, trimming fur massage etc.) £177.84 
Exercise - dog walkers £122.16 
Accommodation - kennels or day care £31.17 
Clothing/Accessories and bedding £26.33 

When it comes to birthdays, over a third buy their pup a cake and six in ten get them a gift. 

American Express conducted the survey ahead of Small Business Saturday on 3rd December. 

Alice Noone, Vice President Marketing at American Express said: "As a champion of small businesses we recognise their importance to the health of the local economy. 

"However, this research also highlights the role these small independent shops play in maintaining the health and happiness of our family pets. 

"We hope to encourage dog lovers to lend their support and shop small on 3rd December and beyond." 

One of the businesses seeing growth as a result of the boom includes Sudbury Dog Company in Suffolk, which launched in 2012. 

Owner Genevieve Parsons said: "We are a family business with the welfare of dogs at heart and we offer a number of services that help dogs to be happy, confident and sociable - from puppy socialisation classes and training to dog birthday parties. 

"As a small business, we have the opportunity to be nimble and offer programmes which really make a difference to pets and their owners' lives - so it's fantastic to be involved in a campaign which celebrates that." 

Holly Johnson, manager of Hair of the Dog in Highgate, London, said: 

Manager, Holly Johnson, said: "One of the benefits of being a small business is that we can talk to our customers on a daily basis, ensuring that we're constantly up to date with what they need so we can offer the best service and products for happy, healthy pets. 

We're also able to source unique products which aren't readily available on the high street, giving local pet owners a reason to come to us. 

As a result, we have a built a very loyal customer base over the years - those who have been with us since launching in 2010 and those who have joined since."