By Marcus Leach

British importers' and exporters' confidence in the economy has hit an all time low, as the threat of a double dip recession becomes more of a reality in the run up to the Budget, according to the Travelex Confidence Index report released on Wednesday.

More than half of importers and exporters, 51 per cent, think a double dip recession is likely, a 17 per cent increase from January 2011, whilst 45 per cent are concerned the Chancellor's Budget will negatively impact their business.

These figures come despite the British Chambers of Commerce (BCC) reporting a narrowing in Britain's trade deficit.

“The January figures are better than expected, with the trade deficit narrowing and robust growth in exports in goods and services, as imports fell," A BCC statement read.

All Indices recorded a drop and the Confidence Index tumbled five points to 101 from last month and 10 points from its high in November last year.

The Current Situation Index, which monitors importers' and exporters' views on current economic conditions and availability of business credit, fell to a record low to 94 - a seven point decrease. Access to credit remains a problem, with 52 per cent of importers and exporters saying it is no easier to obtain credit this year than it was last year. This is the highest level it has been since April 2010.

The International Trade Index has tumbled 14 points since its high of 113 in November, as importers grow increasingly concerned over the impact of sluggish consumer demand.

Even the Expectations Index, which historically has remained relatively stable, fell by one point to 99, indicating a chink in the resolve of importers and exporters. Only 56 per cent of importers and exporters said they were confidence about future trading conditions, a 4 per cent drop from the previous month.

"It is an unsettling time for British importers and exporters, as uncertainty over the economy grows in the run up to the Budget," comments David Sear, Global Managing Director at Travelex Global Business Payments.

"The resilience we saw towards the end of last year as the Coalition put forward their strategy to address the deficit has started to weaken as the tax hikes, changes to consumer spending and the increase in National Insurance start to become a reality.

"Confidence plays a huge part in our economy as individuals and businesses tend to spend more the more confident they feel. In this current climate it is less easy for importers and exporters to feel confident. Last month we saw the trade deficit widen to the highest on record, which shows that exports are not supporting the recovery as expected."