Business confidence has declined in the third quarter of this year, according to the latest ICAEW/Grant Thornton UK Business Confidence Monitor (BCM).

The BCM has declined from the second quarter of this year 2010, falling from +25.5 to +21.5, a drop of four points. Nearly a fifth of companies are now less confident about the coming year - up from 14% that stated this in the first three months of 2010.

However, the monitor also revealed that turnover and profit growth returned to positive territory for the first time since the start of 2009.

Businesses expect to increase prices by only 0.9% in the next twelve months which points to limited inflationary pressures and no need for interest rate rises for some time.

"UK businesses that came through the recession are now facing the challenge of surviving the recovery. They still don't know what the future holds and are uncertain about how the mood of fiscal austerity will impact the economic recovery," said Michael Izza, CEO of ICAEW.

"The government needs to deliver on its commitment to ensure Britain is open for business while taking the tough decisions required to tackle the deficit."