The UK's economic recovery remains weak and the Coalition has failed to tackle the underlying reasons.
The British Chambers of Commerce surveyed 6,600 of its members and found efforts to move the economy towards increasing exports has failed.
Although manufacturers are having more luck with exports than with domestic sales, the BCC warned that continued weakness in the eurozone and in the US housing market means that the UK economy is still facing serious risks.
David Frost, director general of the BCC, said: "Britain's economic recovery is continuing but the pace of growth is too slow, and our economy is out of balance... We do not export enough goods and services, meaning we run up continual trade deficits.
"We accept the need to persevere with painful measures to cut the deficit. But the government must move beyond the rhetoric of growth, and introduce radical reforms to help businesses export, invest and create more jobs."
BCC members are still struggling with cashflow. There have been marginal improvements but survey results are still in negative territory. Pressure to push up prices is continuing – 38 per cent of manufacturers say there is pressure to hike prices thanks to increases in raw materials and inflation pressure elsewhere.
There is some good news though: manufacturing confidence remains high, it rose 12 points to 40 per cent. The BCC accepted that results were offset by fewer working days in the quarter. It expects GDP growth of 0.3 per cent for the quarter.
It called on the Bank of England's Monetary Policy Committee to postpone "premature interest rate rises" and the government to "implement more growth-enhancing policies". ®