The British Chambers of Commerce (BCC) said, the UK economy slid further in the third quarter and was showing signs of stagnation.
According to the trade body, cash flow remained a real concern for many of the 6,700 businesses it surveyed.
BCC director general, John Longworth said, only through making ''tough choices'' could recession be avoided.
It has downgraded UK economic growth outlook three times and expects the economy to expand by just 1.1 per cent in 2011, as against 1.9 per cent at the start of the year.
According to last week's official figures the UK economy grew by 0.1 per cent between April and June, down 0.2 per cent estimated previously.
The Office for National Statistics also revised growth in the first three months of the year down from 0.5 per cent to 0.4 per cent.