Survey raises double dip fears

| September 13, 2010 | 0 Comments

A survey by accountancy firm, BDO LLP, has revealed business confidence has slumped to a level not seen since the height of the financial crisis two years ago.

The firm’s optimism index (which reflects how businesses expect trading to develop two quarters ahead), fell from 95.5 in July to 93.1 last month.

According to BDO, this represents the first time the index had dropped below the crucial 95 mark since July 2009.

The survey revealed that businesses are becoming increasingly pessimistic about trading prospects.

Commenting, BDO Partner Peter Hemington said: “If Q4 does indeed turn out to be the start of a double dip, it certainly won’t be a merry Christmas for UK businesses.

“What’s so disappointing is that businesses seem to be convincing themselves that things are going to get really tough in 2011 and are deferring new hires and investment decisions as a result. Much of this comes from the hype around the government’s spending cuts,” he added.

The Government’s tough austerity measures have led many leading business groups to suggest the UK could be pushed back into recession.

Many experts have all warned that cutting the deficit too quickly could pose a threat to the fragile recovery, because spending cuts and a hike in taxes will have slashed the forecast for growth which increases the possibility of a double dip.

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