A business group has warned that "fresh challenges" lie ahead amid signs the economy was slowing down at the end of last year.

Scottish Chambers of Commerce said the slowdown started before the onset of the harsh winter weather, which caused further problems for business.

The comments were made as official figures showed Scotland's economy grew for a second successive quarter, although at a slower pace.

Gross Domestic Product increased by 0.5% between July and September, following growth of 1.3% over the previous three months.

The Scottish Government said the increase was driven particularly by the construction sector.

The Scottish Chambers of Commerce said its business survey for the fourth quarter, covering October to December, highlighted concerns.

Garry Clark, head of policy and public affairs, said: "Our survey shows that the slowdown of the economic recovery we noted in the third quarter of 2010 continued to the end of the year.

"Whilst the severe December weather clearly had an impact on activity, there are a number of more important issues affecting Scottish business that require to be addressed in 2011 if the recovery is to continue and strengthen."

He noted positives in manufacturing and exports but added: "Other sectors continue to experience challenging trading conditions and there remains no sign of any general economic upturn in the near future."

Mr Clark said business confidence remains weak and that cuts to public spending are having an "increasing impact" on trade.

He said: "2011 will be a year in which both businesses and consumers will have to manage rising inflation as a result of the VAT increase and higher energy, transport and raw material costs."

The survey revealed that confidence was "weak" in wholesale and retail distribution and noted downward trends in confidence for manufacturing and construction.