The pace of Britain's economic recovery is too slow and the Government needs to do more to support business, a key lobby group warned today.
Economic growth between April and June remained positive but the recovery is fragile and facing serious risks, the British Chambers of Commerce (BCC) said.
The international background has become more uncertain, with worsening debt problems in the Eurozone and concerns around the US housing market, which has hit hopes of rebalancing the UK economy toward net exports, the BCC quarterly survey found.
The BCC expects the UK economy to have grown 0.3% in the second quarter of 2011 as the services and manufacturing sector put in a "mixed" performance.
Official figures showed that the UK's economy grew by 0.5% in the first quarter of 2011, after a 0.5% decline in the final quarter of 2010, meaning the economy effectively flatlined for six months.
David Frost, BCC director general, said: "Britain's economic recovery is continuing but the pace of growth is too slow, and our economy is out of balance.
"Wealth-creating businesses must be given the right conditions to create growth or there is a real chance that the economic recovery could be thrown off course.
"The public sector is too large and the private sector is too small. We do not export enough goods and services, meaning we run up continual trade deficits.
"We accept the need to persevere with painful measures to cut the deficit. But the Government must move beyond the rhetoric of growth, and introduce radical reforms to help businesses export, invest and create more jobs."
The BCC survey showed exporting activity was not strong enough to suggest a rebalancing towards exports in the UK, with export sales balances in manufacturing falling by four points to 26% growth and rising only slightly in services by three points to 18% growth.
Manufacturers' confidence in turnover and profitability improved in the second quarter, but remained at weaker levels than in the final three quarters of 2010, the BCC said.
In the powerhouse service sector, confidence in turnover fell slightly and confidence in profitability remained the same at a "disappointingly weak" level.
David Kern, BCC chief economist, said: "Recent economic data suggests that the rebalancing of the economy towards net exports is still not strong enough.
"With the international situation becoming more uncertain, there are worrying signs that global growth is set to slow, and this will add to the challenges facing UK exporters."
He added: "To minimise dangers of a setback, the government must implement more growth-enhancing policies that will enable private sector firms to increase productivity and drive the recovery forward."