Recent economic indicators suggest that the worst of the recession is over, with some of the factors driving the large contractions in economic output witnessed in the final three months of 2008 and first three months of 2009 dampening recently.

That is not to say that risks to the economy do not still exist. There are very real dangers that threaten the wealthcreating business community. These include a lack of demand, a sluggish return to growth for the UK's main trading partners and, crucially, the suitability of government intervention to support economic activity.

Furthermore, the recession has resulted in a massive expansion of the nation's debt obligations and it is imperative that a clear exit strategy for improving the UK's finances is set out. This will require some tough decisions, not least addressing pay and pension liabilities in the public sector.

There needs to be recognition of the implications of spending cuts and tax rises. Increases in business taxes should be avoided at all costs, as this will only smother the enterprise which will drive us out of recession. A perfect example of a misguided approach is the national insurance contributions increase planned for 2011. This is effectively a tax on jobs, at precisely the time when everything possible should be done to encourage businesses to take on staff.

The British Chambers of Commerce has 100,000 members, spanning the length and breadth of the country. Above all, our members are pragmatic and versatile, and the speed at which they have countered the economic downturn has been impressive and encouraging.

A large majority of the businesses to which I speak have cut all excesses out of their operations. Firms which have had to make redundancies have done so reluctantly, as it means the loss of skills and experience. However, this has been countered by some companies which have used the flexible labour market to introduce short-time working to retain staff.

Further observations are that firms are trying to penetrate new markets. Larger companies are entering markets previously regarded as too small for them, or entering related markets to the ones that they already operate in. It is this dynamism that will help businesses as the recession bites.

To its credit, the government has provided some effective support in response to the downturn. HM Revenue and Customs' business payment support service, allowing firms to spread tax payments, and the enterprise finance guarantee, which offers state-guaranteed bank loans, have both been useful tools.

The Chambers of Commerce network has provided invaluable assistance to businesses, providing a number of frontline services on international trade. It is also one of the largest sources of work-based learning and training in the UK and has created workshops, held seminars and networking events, set up business clinics, provided confidential helplines, signed up to payment pledges, provided legal advice and offered resources to help businesses find new suppliers and customers.

It will be small and medium-sized enterprises that drive the UK out of recession. The help they receive needs to be targeted efficiently and directly aimed at addressing business problems. The government should keep this in mind when developing its business policies.

For more information visit www.britishchambers.org.uk [1]