Business confidence continues to fall following the European Union referendum result and is at its lowest for over three years, says a new report.
Research by accountants BDO LLP showed a particularly gloomy picture among manufacturing companies.
But the report said the decline in confidence after Brexit was less than expected.
Peter Hemington, of BDO LLP, said: "Brexit has compounded the continuing slowdown of the UK economy but there is opportunity as well as challenge ahead for UK businesses.
"The Bank of England's decision to lower interest rates is a step in the right direction. We now need a concerted effort from government to lay the foundations for future growth.
"That means taking advantage of cheap borrowing costs to invest in UK infrastructure, encouraging prosperity across the regions and improving productivity."