The UK economy is on the "brink of leaving recession", according to the British Chambers of Commerce (BCC).
In its economic survey for the fourth quarter of 2009, the BCC says there have been improvements in many areas, most strikingly in manufacturing.
But it warned that, despite exports in the service sector strengthening, services were still struggling.
Separately, the British Retail Consortium said stores had seen their best December growth for eight years.
Like-for-like sales rose 4.2% by value during the month thanks to a last-minute buying spree by shoppers and a rebound in consumer confidence, the retail group said.
The BCC says UK productivity could be hit if "sharp falls in business capital spending are not reversed".
It also says the 1% increase to employers' National Insurance Contributions planned for 2011 should be scrapped.
David Frost, director general of the BCC, said there had been strong improvements in employment and exports within the manufacturing sector.
"Businesses are showing resilience despite difficult and uncertain trading conditions," he said.
"Confidence is improving, and the boost in exports must be nurtured in order to strengthen Britain's trade position globally, and to help rebalance the economy away from an over-reliance on the public sector."
But the BCC said that disturbing weakness facing the service sector must be remedied to "enable the UK to attain a sustainable recovery".
David Kern, chief economist at the BCC, added: "With improvements in most key national indicators, the Q4 results support the view that we are on the brink of leaving recession.
"However, with a number of critical measures still in negative territory, the economy is struggling to enter the recovery phase."
In January 2009 the UK entered recession for the first time since 1991, after experiencing two consecutive quarters of negative economic growth.
At present the UK is one of the last major economies still in recession, with the French and German economies exiting recession last summer.