THE UK economy ended 2018 stuck in a "weak holding pattern", with uncertainty over Brexit hitting sales and recruitment, according to a new report.
Problems hiring staff are at near-record highs, a survey of 6,000 firms suggested.
The British Chambers of Commerce (BCC) said its study indicated that growth in the economy had "stagnated."
Four out of five manufacturers are struggling to recruit suitably skilled workers, with almost as many services companies having similar problems, the BCC said.
The percentage of manufacturers expecting to raise prices is at its highest level in a year, said the report.
Dr Adam Marshall, director general of the BCC, said: "Throughout much of 2018, UK businesses were subjected to a barrage of political noise and drama, so it's no surprise to see firms report muted domestic demand and investment.
"In this new year, the government must demonstrate that it is ready to act to turbo-charge business confidence.
"With little clarity on the trading conditions they'll face in just two months' time, companies are understandably holding back on spending and making big decisions about their futures.
"The government's absolute priority now must be to provide clarity on conditions in the near-term and avoid a messy and disorderly Brexit. Business communities won't forgive politicians who allow this to happen, by default or otherwise.
"Given the magnitude of the recruitment difficulties faced by firms clear across the UK, business concerns about the government's recent blueprint for future immigration rules must be taken seriously and companies must be able to access skills at all levels without heavy costs or bureaucracy."
Suren Thiru, the BCC's head of economics added: "Our latest survey suggests that UK economic conditions were worryingly subdued in the final quarter of 2018, with a number of key indicators continuing to weaken under the weight of persistent Brexit uncertainty and rising cost pressures."
Meanwhile UK manufacturers are stockpiling goods at near record rates in preparation for a calamitous no-deal Brexit.
The Markit/CIPS UK manufacturing purchasing managers' index (PMI) showed a reading of 54.2 last month, higher than the 53.6 recorded in November, and a six-month high.
The survey showed that uncertainty over the impact of Brexit influenced manufacturers' purchasing activity, stock levels and business confidence in December.
Buying volumes increased as companies implemented plans to reduce supply-chain disruption if Britain crashes out of the EU without a deal.
As a result, inventories rose at the fourth-fastest rate in the survey's 27-year history and a rise in finished goods stocks in December was the second-strongest since the survey began in 1992.
Rob Dobson, director at IHS Markit, which compiles the survey, said:
"Stocks of purchases and finished goods both rose at near survey-record rates, while stock-piling by customers at home and abroad took new orders growth to a ten-month high."
