By Liz Stephens
Business confidence shows signs of a slight rise according to a report by Lloyds TSB.
The bank's half yearly 'Business in Britain' survey shows firms are more hopeful about sales and orders but profits are still under pressure.
However, investment and recruitment remain constrained and the shape and strength of the recovery remains uncertain.
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The Lloyds report charts the performance of over 2,500 UK firms and their views on the prospects for the coming year.
31 per cent of firms surveyed expect an upturn in sales by the end of the year. However 30 per cent are braced for a fall.
But a year ago only 20 per cent of firms were optimistic about a rise in sales.
A similar picture emerges for orders.
Despite the fresh hopes, profits are likely to remain under pressure for most firms and one third of companies reported cash-flow problems, with late payments by customers and weak demand being the main causes.
The picture is better for exports than it is for the domestic market. One-third of the firms surveyed predict that exports will rise.
John Maltby, managing director of Lloyds TSB Commercial, said: "A major factor in the dramatic fall into recession has been plummeting business confidence - and restored confidence is the key to any recovery. So this evidence that firms are regaining faith in their business prospects is good news."
Business confidence improved in all sectors, with business and other services, wholesale distribution and manufacturing reporting confidence levels above the all-sector average.