Business confidence in the UK is at its highest point for four years.
The KPMG Global Business Outlook survey reveals expectations in manufacturing are the highest in its nine year history and confidence in the service sector at levels not seen since April 2007.
KPMG warns there is an element of "fragility" about the recovery.
"Assuming we can ride out that uncertainty, the longer term questions we should be asking are about where manufacturing will figure in the Government’s efforts to rebalance the economy and reduce the UK’s dependency on the financial services sector," the report says.
"If we assume that manufacturing is going to be part of that rebalancing, are we in a suitably fit state to take advantage?
“Finance is obviously one issue – although it has been mooted that the more publicly owned banks could be called into action to provide development funding to the sector."
KPMG also warns of a potential skills shortage: "We have long assumed that the UK holds inherent advantages in terms of its specialist, niche and high-end engineering skills.
"This may no longer actually be the case and that we could be in for a nasty surprise unless close attention is paid to our longer term skills development.”