Britain's economy showed encouraging signs of growth, but the pace of recovery is still too slow, according to a report on survey for the first quarter of this year issued by the British Chambers of Commerce (BCC) Tuesday.

The BCC survey, which receives almost 8,000 responses from businesses across Britain, said results for the first quarter are more encouraging than the previous quarter, despite its previous warning of "stagflation."

"Many manufacturing balances are now at a satisfactory level, but the service sector balances are sluggish," said the report.

BCC expects economic growth of 0.3 percent in the first quarter of 2012, which means Britain would avoid a technical recession, as the term is defined as two consecutive quarters of contraction, and the country's GDP for 2012 at 0.6 percent.

However, experts argued that the moderate growth would not guarantee the country immune to further economic turbulence.

"Britain's economy is still facing huge challenges and the recovery is much too slow. Britain has the potential to recover, but to achieve that the government has to set businesses free to grow," said John Longworth, Director General of the BCC.

This view was backed by chief economist of BCC, Davide Kern, who said "we are still concerned that the unresolved problems in the eurozone may trigger new upheavals later this year."

"In view of the increases in oil and food prices since January, our current forecast is that the fall in Britain inflation over the next 12-18 months will be slower than first expected," Kern added.

The survey found improvement in both domestic and overseas sales, as well as employment, business confidence and investment.