The managing director of Newport-based chamber of commerce Ngb2b, David Russ, said that businesses in Wales were faced with tightening cashflow issues.

On the BCC's latest quarterly survey he said: "What this forecast points to is a significant weakening of business and consumer confidence. Granted, the risk of a true recession may be something of a self-fulfilling prophecy, but spiraling costs and cashflow issues are of very real concern to businesses in Wales. "From conversations with members of Ngb2b it is apparent that money is tight and cost control is an issue, and these difficulties are compounded by debtors that are failing to settle invoices on time. Businesses are therefore finding themselves in a Catch-22 situation, where they don't have the money to purchase the things they need to satisfy customer demand.

"Although domestic trade seems to be taking a significant hit, there has been a noteworthy increase in the export activity of local businesses, particularly to China and India. In the last year alone the number of export documents administered through ngb2b has grown 25% to a level over and above what Newport and Cardiff chambers had collectively processed in the past.

"Certain industries will undoubtedly feel the ill-effects of the current economic climate more than others. But if we as a country continue to invest in entrepreneurship, and strengthen synergies between the academic and business worlds, I am confident that Wales can counteract a downturn."