The British Chambers of Commerce say Britain is likely to avoid a recession, although growth will not pick up properly until 2013.

The British Chambers of Commerce say Britain is likely to avoid a recession, although growth will not pick up properly until 2013 (Reuters)

The BCC's quarterly economic survey predicts growth of 0.3 per cent in the first three months of 2012, in line with estimates from the independent Office for Budget Responsibility (OBR), whose figures are used by the government.

The forecast, based on 8,000 responses from businesses across the UK, is a marked improvement on the BCC's survey at the end of 2012, which pointed to falling growth and rising inflation.

Last week, the Paris-based think tank, the Organisation for Economic Co-operation and Development (OECD), said Britain was likely to be in recession.

Growth was negative in the final three months of 2011 and if national income declines in the first quarter of 2012, the OECD will be proved right. But the BCC's chief economist, David Kern, said the results of the organisation's survey of members - the largest of its kind in the UK - point to a small increase in growth.

The BCC expects the economy to grow by 0.6 per cent in 2012, lower than the OBR's forecast of 0.8 per cent.

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Recruitment

The survey suggests that employers are becoming more confident about recruitment, with manufacturers noticeably more bullish than the services sector. But there are worries about the sluggish pace of recovery since the 2008-09 recession.

John Longworth, director general of the BCC, said: "It's encouraging to see that businesses are feeling more confident at the start of 2012 than they were at the end of 2011. But that underlines the need to support and foster growth and investment by companies to ensure that the increases we have seen in the first quarter continue.

"The UK economy is still facing huge challenges and the recovery is much too slow. The UK has the potential to recover, but to achieve that the government has to set businesses free to grow."

"This is clear evidence of the private sector’s ability to create new jobs and there are many examples of businesses here in Leeds expanding their workforce to support ambitious growth plans," Mark Goldstone, from Leeds Chamber of Commerce told Channel 4 News.

"The QES also shows a noticeable increase in business confidence, with turnover expectations amongst manufacturers at a four and half year high. We hope that this boost in confidence will eventually translate into job creation; however, with many businesses still operating below capacity there may be some delay before we see any significant change to the unemployment figures."

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'Upheavals'

Mr Kern said he was concerned that problems in the eurozone "may trigger new upheavals later this year", while the fall in inflation could be slower than expected.

He said that with unemployment likely to rise to 2.9 million over the next year, it was vital the government developed policies that enhanced growth.

The survey shows that while business confidence has risen, it is still low by historical standards, particularly in the services sector. Even so, more firms are planning to increase investment, with manufacturers likelier to spend money on plant, machinery and training than the services sector.