Britain’s faltering economy is on course to shrink in the first three months of next year as business confidence slides, according to a new survey.
Accountant BDO said its business optimism index, that looks two quarters ahead, is indicating “negative growth” for the first quarter of 2012.
For the first time since July 2009 optimism among both manufacturing and services firms was below the level that indicates expansion, it added.
Manufacturers’ confidence especially has tumbled, BDO said, while the employment survey fell for a fourth consecutive month in September.
Peter Hemington, a partner at BDO, said: “Businesses’ hiring intentions point to more job losses ahead which, coupled with tumbling optimism and output, indicates tough times in early 2012.”
Last week, official data showed the UK economy grew even slower than previously thought in the first two quarters of 2011.
Gross domestic product grew 0.1 per cent between April and June, compared with an earlier estimate of 0.2 per cent, while the first quarter was downgraded to 0.4 per cent from 0.5 per cent, the Office for National Statistics said.
On Friday, Bank of England Governor Mervyn King warned the UK could be facing “the most serious financial crisis” ever seen after unveiling a surprise move to pump £75 billion into the ailing economy.
His comments came after the Bank’s Monetary Policy Committee voted to boost its quantitative easing programme from £200 billion to £275 billion and hold interest rates at 0.5 per cent, which economists took as the clearest signal yet that the Bank thinks Britain is on the brink of a double-dip recession.
Peter Hemington at BDO added: “Given the data we’re seeing, this [£75 billion] will provide a much needed and timely boost.”