THE UK avoided a “double dip” recession in the first quarter – as the recovery in the key services sector gathered pace, said a survey.

But the latest quarterly economic report from the British Chambers of Commerce revealed that “serious risks of a setback remain” as the manufacturing sector continues to suffer.

The poll of more than 5,500 businesses showed that manufacturing sales were barely positive, while new orders stayed in decline.

Manufacturing employment also suffered a relapse after an encouraging fourth quarter – with a sharp fall in workforces over the past three months.

However, improvements in the far bigger services sector kept the UK out of recession in the first quarter with growth in both orders and sales.