The first-quarter rebound in the UK economy was weaker than expected, a survey suggests, adding to a growing consensus the Bank of England should again delay raising interest rates this week.
The British Chamber of Commerce (BCC) says the upturn in the first three months of the year was likely to have only been slightly larger than the decline of 0.5% seen in Q4 2010.
Based on a survey of 6,000 UK businesses, the BCC report said firms continued to be constrained by cashflow and price pressures as well as low consumer confidence.
The Office for National Statistics (ONS) is set to release its first estimate of GDP for the first quarter on 27 April.
On Thursday, the Bank of England's Monetary Policy Committee will again vote on whether to raise interest rates or keep them at their historic low of 0.5%.
BCC chief economist David Kern says the BCC data did not "point to a new recession, [but] to continued growth".
But he says the recovery will be "fragile", adding the data "certainly provides support for the view that the MPC should not rush [raising interest rates].
"The longer they wait, the better the growth profile."
Some 80% of manufacturing firms taking part in the BCC study said the cost of raw materials was putting pressure on them to raise prices.
"Exporting activity remains strong, but there have been sharp declines in confidence, and cashflow is still a real concern for businesses," director general of the BCC, David Frost says.
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