The confidence of British business firms has hit its lowest level since 1992, according to a survey by Lloyds TSB.
The ongoing global credit crunch appears to be sapping the positivity that existed in business just 12 months ago as profits and sales continue to be squeezed, the bank's commercial arm has revealed.
The Business Confidence Index for July shows that the balance of firms expecting better rather than worse order books, profits and sales over the next six months fell sharply to eight per cent, from 18 per cent in January.
However, there are significant variations in the results for different regions and sectors, with London and the east less affected by slumping confidence.
The lack of optimism about the outlook for the next six months reflects firms' experiences in the first half of the year.
The report - based on the responses of more than 1,800 UK firms - shows that, during the first six months of 2008, a balance of just six per cent of companies reported rising, rather than falling, sales (37 per cent and 31 per cent, respectively).
Managing director of Lloyds TSB Commercial John Maltby said: "The challenging economic climate is putting businesses to the test.
"And with sales and profits squeezed, it's no surprise that so many firms are suffering a lack of confidence.
"But the reality is that many firms will be able to weather this storm. Our survey indicates slow growth rather than recession and business liquidity remains good.
With the right support and financial help, there are lots of opportunities for strong businesses to continue growing."
The Business in Britain survey has been carried out twice a year since 1992, with the latest made up of responses from firms with a turnover of more than £1 million collated last month.