LONDON, Jan 7 (Reuters) - British businesses reported strong growth and rising confidence in the fourth quarter of 2013, suggesting the country's economic recovery will pick up speed, a survey showed on Tuesday.
The British Chambers of Commerce (BCC) said its quarterly economic survey indicated the overall economy grew by around 0.9 percent in the October-December period, faster than 0.8 percent in the third quarter.
Domestic sales and orders among firms in the dominant services sector jumped at the fastest rate in more than nine years and their export sales and orders were the highest since 1989 when the survey began.
Although manufacturers' domestic sales and export orders readings dipped slightly, they reported the joint highest level of confidence since 1989 that their profitability would rise in the year ahead and investment intentions grew.
"With most key balances in this quarter higher than their pre-recession levels in 2007, it is clear that the UK recovery is likely to continue to strengthen in the short term," said David Kern, chief economist at the BCC.
The BCC survey - Britain's largest private-sector business poll - also showed British employers were looking to ramp up hiring, with a balance of 27 percent of service firms and 31 percent of manufacturers planning to increase headcount in the next three months.
Employment statistics are being closed monitored by the Bank of England which pledged in August to keep interest rates at record lows at least until unemployment falls to 7 percent.
With unemployment falling sharply to 7.4 percent in recent months, the Bank has been quick to stress that its 7 percent threshold is not an automatic trigger for a rate hike.
The BCC warned on Tuesday that headwinds to the recovery remain. "The euro zone's basic problems have not yet been resolved, which could adversely impact our exporters, and inflation remains a major concern," Kern said.
In a sign of potential inflationary pressures, a growing number of firms told the BCC they were looking to raise prices, with manufacturers citing higher raw material costs and services companies greater financial costs and overheads.
The BCC surveyed almost 6,000 service firms and more than 2,000 manufacturers between Nov. 11 and Dec. 2 for its poll.