Yet UK businesses remain extremely confident over their prospects for this year, the British Chambers of Commerce (BCC) survey revealed.
Turnover confidence stayed close to a three-year high, the survey said, while confidence in 2011’s profits reached its highest level since the end of 2007.
And British exports continue to grow, businesses revealed. Manufacturing export sales soared 13 points in the survey, while export orders surged 21 points.
And manufacturing was strong in London, the report showed.
“A majority of London manufacturers reported growth in both export sales and orders over the past three months, suggesting there is potential for an export-led recovery,” said the BCC’s Dr Helen Hill.
Service sector exports, meanwhile, jumped to pre recession levels.
However, overall the service sector is in a less strong position than its manufacturing counterpart, the survey revealed.
“The service sector’s weaknesses are worrying,” the BCC warned, “and unless reversed could have adverse consequences, particularly for jobs.”
The report suggests that GDP growth for the final quarter of the year could come in at around 0.4 or 0.5 per cent. The economy is “not out of the woods” yet, the report’s authors said.
“The government must encourage more new start-ups, more employment, create stronger companies and support export potential,” said BCC director general David Frost.