British economy is forecast to go further deterioration with signs of stagnation in the first quarter of 2012, said a survey on Tuesday.
However, according to the latest quarterly economic survey by the British Chamber of Commerce (BCC), a new recession is not inevitable despite the weak economy.
The survey, comprising some 7,850 responses from businesses across Britain, showed declines in most indicators across both manufacturing and services in the last quarter of 2011.
While measures for the previous three months indicate minimal growth, expectations for the coming three months have significantly weakened.
The BCC said domestic demand is at its lowest level in more than two years.
The results do not indicate a recession, and are still better than those seen in the worst phase of the last downturn.
The worsening international situation, and the growing risks facing the eurozone, present challenges for British exporters and business confidence as a whole.
"Improvements seen in the last two years have largely been cancelled out," said BCC director-general John Longworth.
Manufacturing balances for home deliveries declined over the past three months by falling three points to zero percent, and also for forward-looking orders by dropping nine points to a 12 percent drop. Both balances are at the lowest level since third quarter of 2009.
In the service sector, the home orders balance dropped six points to a drop of nine percent.
The balance for export sales by manufacturers over the past three months saw a fall by six points to an increase of 12 percent.
But, the manufacturing balance for future export orders declined nine points to a five percent rise.
Still, the BCC said that the results do not indicate a recession, and are still better than those seen in the worst phase of the last downturn that began in 2008.
"Action is needed urgently to tackle short-term stagnation and a lack of business confidence, damaged by the ongoing eurozone crisis."
Longworth urged British companies to expand exports outside the eurozone./.