A survey of 772 businesses found that many were more confident about their own prospects than they were about the economy as a whole.

While only 47% were more pessimistic about their own trading outlook, a massive 83% were more pessimistic about the UK economy as a whole.

There were worries voiced, especially in the manufacturing sector, but the survey found that many firms were doing reasonably well.

This was reflected in the reported outlook for job prospects too.

At a least a quarter of firms said they planned to increase their number of employees and their levels of investment next year.

Director General Adair Turner said the fact that so many more firms were concerned about the overall economy than about their own prospects highlighted "the danger of talking too much about recession".

"We must avoid talking ourselves down further and allowing a UK recession to become a self-fuldilling prophecy," he said.

Mr Turner said it was clearly a difficult time for some sectors and a sharp economic slowdown was expected, but he did not believe this was going to turn into recession.

The survey showed that external factors were having an adverse effect on businesses.

The strength of sterling hit many firms hard, but its current level of 2.77 against the German mark was not too far off the preferred level of 2.6-2.7 cited by most firms as the level at which they could compete effectively.