Hot Features
Premium
Register for Free to get streaming real-time quotes, interactive charts, live options flow, and more.
The British economy is off to a “shaky start” in 2013 as businesses around the country became even more pessimistic of the plight of the economy in the next six months, according to a survey conducted by accountancy firm BDO.
In a report published earlier today, BDO Optimistic Index continued to fall and reached a 21-year low to 88.9, indicating that businesses performance in the next two quarters are still bleak and that the economy will be struggling in the first quarter of 2013.
The said index also presented a possibility of a triple-dip recession as it has been falling since November and has been below the 95-mark that spells growth for the eight consecutive month.
Despite the pessimism, UK companies intend to hire more personnel in the next six months, as shown by the Employment Index, at 95.1 coinciding with the National Statistics report of falling unemployment rate in the September to November 2012 period. According to the report, the increased hiring will be for full-time positions.
UK output is also expected to fall, as the Output Index fell from 93.1 in December to 92.3 in January, driven by service sector firms despite a nine-month high optimism shown by the manufacturing sector at 95.2.
“With consumers still facing real income erosions, export growth under pressure from recession in the eurozone and government austerity yet to take full effect, plenty of downside risks still remain for the UK economy,” the BDO Monthly Business Trends Indices said.
Zigzagging Economic Growth
Peter Hemington, Partner and head of BDO’s M&A division, pointed out the unstable economic growth that has fallen up and down during the last five years since the financial crisis as the reason for the pessimism that is seen amongst UK businesses.
“It seems the damaging effects on businesses of five years’ zigzagging economic growth, has left them wary of making concrete plans for expansion and resigned to the ‘new normal’ of economic stagnation,” he said.
“To end this cycle, it is imperative that the Government implements plans to expedite growth. Without growth incentives, we will continue to see UK businesses reluctant to invest and expand, which poses a grave threat to the UK’s economic recovery,” he proposed.
