Despite cutting its growth forecast for this year, the Confederation of British Industry has said it believes the UK is in the clear when it comes to a triple-dip recession.
However, the leading business body expects the UK economy will grow 1% in 2013, less than its previous estimate of 1.4%.
It warned of the potential for a new "flare-up" in eurozone tensions, which would hold back confidence and keep growth in check.
But a rise in job vacancies and an improvement in business sentiment since its last forecast suggested the economy would avoid another recession and grow 0.3% in the first quarter of this year.
CBI director-general John Cridland said: "We are beginning to see the return of organic growth, with clear signs that firms offering the right products into the right markets are growing sales and expanding.
"Recent business surveys also give grounds for cautious optimism about our forward prospects."
Hopes that Britain will avoid another recession have also been boosted by recent surveys which showed the services sector returned to growth and manufacturing output rose at its fastest pace since September 2011, in January.
The CBI is forecasting that inflation will edge higher until mid-2013, but will fall back in the second half of the year, and will be close to the Bank of England's 2% target throughout 2014.
On Tuesday, official data showed the UK consumer price inflation had remained unchanged at 2.7% for the fourth consecutive month.
On another positive note, it said UK exports will be stronger this year, with the global economy likely to grow faster as growth in China picks up and the US economy continues its "relatively solid, if unspectacular recovery".
But conditions will still be difficult for households in 2013, given weak growth in household spending power and unemployment at around 7.8%.
It believes unemployment levels are unlikely to change significantly over the forecast period, at 2.5 and 2.42 million in 2013 and 2014 respectively.
Next (Other OTC: NXGPF - news) year, the CBI is expecting growth of 2%, unchanged from its November (Xetra: A0Z24E - news) forecast, whilst quarter-on-quarter growth is expected to be modest at around 0.5-0.6%.
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