It points out that if these trends continue the UK business sector is now only one quarter away from technical recession.
The BCC’s latest economic survey received a record response with nearly 5000 businesses taking part.
According to the survey, cashflow is in negative territory and at record lows, showing the credit crunch and rising costs have now hit business.
All the confidence balances fell sharply in both manufacturing and services, which the BCC notes is a “very worrying development.”
It says home sales and orders, employment expectations and confidence balances are at their lowest level since the recession of the early nineties.
The BCC warns that the correction period is likely to be longer and worse than anticipated.
BCC director general David Frost says: “These results show a real risk of recession in the coming months. This is obviously deeply worrying, not just for business but for the consumer too, with both manufacturing and services reporting negative results. The temptation for the Government will be to raise business taxes in the next PBR because the exchequer is running out of money. This would be a catastrophe.
“I am sending Alistair Darling and Gordon Brown a strong message from the businesses I meet every day up and down the country: to put more pressure on business would not only restrict growth and hit the consumer hard, it would further crush what our economy is based on – confidence.”