The risks of stagnation and recession in the UK economy have risen, according to the British Chambers of Commerce (BCC).

A survey by the BCC showed that the domestic market, exports, business confidence, cashflow and investments in plant and machinery have all weakened over the past quarter.

Businesses surveyed by the BCC show that companies are struggling with both confidence and cashflow, as the economy shows signs of stagnating.

Gross domestic product figures (GDP) from the Office of National Statistics (ONS) released last week showed that growth had come in under forecast at a meagre 0.1 per cent for the quarter.

The manufacturing and service sectors have taken a hit, with cashflow balances at -8 per cent and -6 percent, respectively, as they struggle with unfavourable payment terms and difficulties in accessing capital, according to the BCC.

In a statement accompanying the launch of the study, John Longworth, the BCC’s director general, said that government will need to take action.

“The pace of the UK recovery will remain slow,” he said. “We can avoid a recession, but this relies on the government making some tough policy choices. While it is imperative that the government perseveres with its deficit-cutting plan, there must be a significant reallocation of priorities within the overall spending envelope. We need a much greater focus on those policies that will help businesses expand, take on more staff, export and invest.

“Businesses need continuous reassurance that there is a plan for fiscal stability and a clear road map which will steer us towards a strong recovery. Government must recognize that business is good for Britain, and put in place measures to bolster confidence and support those companies that have the potential to grow. That includes a commitment to a Plan A+ for growth, with alternative paths at the ready in case of further shocks from foreign shores.”

Ahead of employment figures on Wednesday, which are expected to show a further deterioration in the UK’s job market, the BCC found that fewer manufacturers added to their workforces in the third quarter, and that most firms seem to be pessimistic about future expansions.

Business and consumer confidence have both shown significant weakness in recent days. On Monday, a Deloitte survey of chief financial officers showed that 43 percent believe that the UK will slide back into recession, and that companies are trimming back their investments in anticipation of worsening conditions.

On the same day, the Organisation for Economic Cooperation and Development (OECD) said that the UK’s composite leading indicator, a sign of the future direction of an economy’s growth, showed that the country was now in a slowdown.