Business confidence dipped to a three-year low in December with a return to recession a "three in four probability."

That's the verdict of the latest Lloyds Bank corporate markets business barometer. The research suggests that the UK economy is more likely than not to fall back into recession.

Fifty-three per cent of companies were pessimistic about economic prospects (6% up on November), while 30% were more optimistic (up 3%). The only good news was a slowing in the pace of decline.

The Eurozone crisis stalled rising confidence in the first half of the year, sending it on a downward trend for the rest of the year. Companies' own trading prospects also fell sharply in December.

For the second month in a row, services were the weakest sector, suggesting the Euro sovereign debt crisis has spread from its initial impact on manufacturing.

Trevor Williams, the bank's chief economist, said: "Our survey seems to indicate that companies in the UK are bracing themselves for a period of stagnant or even negative growth, with the Eurozone crisis affecting confidence across the board. The economic outlook will depend on whether recent actions by European policymakers will help restore confidence."