UK business experts say the worst of the recession is over – but warn against complacency.

The British Chambers of Commerce (BCC) – whose survey of 5,600 businesses is released today – says recovery will be fragile but pointed to progress in the manufacturing and service sectors in the second quarter of the year and a marked improvement in confidence.

The net balance for domestic sales in the manufacturing sector improved to -37 per cent in the second quarter from -55 per cent in the first quarter. The BCC said sales confidence had improved dramatically, rising 40 points from  minus-38 per cent to plus-two per cent.

But business leaders pointed out that, despite improving since the last quarter, almost all critical measures remained negative with manufacturing cashflow sticking at -32 per cent, the lowest since records began.

The BCC also warns that the economy could risk another steep slide unless the government takes steps to sustain recovery.