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Britain, which emerged from recession in the final quarter of 2009, faces a "high" risk of relapse and below-average growth in the next two years, the British Chamber of Commerce warned on Sunday.
"The UK economic outlook will remain highly uncertain for a considerable time," the BCC said in the group's latest economic forecast.
"The recovery will be fragile, and the risks of a relapse are high," it added.
The BCC predicted that the economy will grow 1.0 percent this year, followed by expansion of 2.1 percent in 2011. It shrank by 5.0 percent in 2009.
The 2010 forecast was unchanged from previous guidance but the 2011 figure was lower than its prior prediction of 2.3-percent expansion.
"The obstacles to a sustained medium-term recovery now appear greater," the business group said.
The BCC added that the recovery would be "modest and below the historical average in the next two years".
Britain escaped from recession in the fourth quarter of last year with growth of 0.3 percent. The expansion during October-December 2009 followed a deep recession that lasted six quarters -- the country's longest on record.
"The recession may have technically ended, but there is no room for complacency," BCC director general David Frost said in the report.
"For the recovery to be sustained, it is crucial that all the political parties recognise the vital role of wealth-creating businesses in driving economic growth and job creation.
"The government must use the forthcoming budget as a platform for laying the foundations for a business-led recovery," Frost added, in reference to the budget which is widely expected later this month.
"If it fails to do so, the recovery will take longer to gain momentum and may even slip into reverse."
And the BCC described the medium-term outlook as "grim" -- with growth set to be dampened by widely-anticipated cuts in public spending.
"The UK medium-term economic outlook is grim. A fragile recovery has started, but prospects are uncertain," it said.
"We are facing a period of austerity. The need to slash government borrowing and curtail debt will inevitably dampen UK growth prospects for a considerable period."
Management of the British economy is a central issue for the upcoming general election that is expected to be held on May 6.
The opposition Conservatives have seen their once-commanding lead over the ruling Labour Party slashed in recent weeks. Polls now put Conservatives' lead at between two and five points.
Whichever party wins power, economists agree that major spending cuts and taxation hikes are needed to fix the public finances, which have been ravaged by recession and a series of hugely expensive banking-sector bailouts.
