The UK economy has "significantly weakened" with domestic demand at a two-year low, but a recession is not inevitable, the latest quarterly survey by the British Chambers of Commerce (BCC) concludes.
A new recession in Britain "is not a foregone conclusion," said BCC director-general John Longworth, quoted in the poll of more than 6,000 businesses.
But Longworth said action was "needed urgently" to tackle short-term stagnation and a lack of business confidence as a result of the eurozone crisis.
The BCC report said one of the next two quarters would likely return negative growth in the UK.
In terms of domestic orders, manufacturers reported their weakest domestic sales growth since Q3 2009, while orders fell at the fastest pace since the second quarter of that year.
In the service sector, the home orders balance dropped six percentage points to -9%.
But the BCC said 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.
The UK economy grew by 0.6% between July and September, official figures showed in December, driven by strong performance in the service sector and construction.
The BCC calculates its figures by subtracting the percentage of companies reporting decreases from the percentage of those reporting increases.
'Right thing to do'
£69m spent on upgrades
European fintech market 'underserved'