Profit growth is expected to rise to 4.7% next year due to rising sales and slowdown in input cost inflation, the ICAEW business confidence monitor found.
Business confidence was at -3.4 on the index, up from the -8 low in the previous quarter.
Despite the overall negative score, confidence was up in certain sectors such as IT (7.8), Energy (4.4), Construction (3.6) and Business Services (1.5), with retail seeing a big rise in the lead up to Christmas, but still remaining negative (-8.9).
The forecast for GDP growth is expected to slow again to 0.2% after the unexpected spike of 0.4% recorded by the Office for National Statistics in Q3.
Import sales are slowly improving and a 0.4% increase from 3.5 to 3.9 is expected next year.
“While businesses are struggling to be confident in the current environment, there are reasons to be more optimistic,” said Michael Izza, ICAEW chief executive.
“Businesses are controlling costs and there is finally some improvement, though small, in export sales growth.
“These findings highlight the cliff edge that the UK economy is on at the moment.”
Izza added that the recent interest rate rise was not unexpected, but that any sudden shocks from the chancellor at the Autumn Budget could have a serious impact.