UK business confidence hits 21-year low

11 February 2013

Positive sentiment among businesses in the UK has declined to a 21-year low point, new research has revealed.

The latest Business Trends report published by accountancy and advisory firm BDO this morning (11 February) showed that its Optimism Index - which estimates company performance six months in advance - slipped to a reading of 88.9 last month.

This represents a downturn on the figure of 90.3 posted in December and also means the gauge has remained significantly below the growth threshold of 95.

Indeed, the measure has now been in contraction for eight months in a row and BDO noted this offers evidence that Britain is unlikely to experience gross domestic product expansion during the opening quarter of 2013.

Meanwhile, the group's Output Index - which is used to predict short-term turnover expectations - also dipped to 92.3 in January from 93.1 one month earlier.

Peter Hemington, partner at BDO, observed: "In spite of a strengthening labour market, business confidence continues to weaken and improved hiring intentions are not translating into growth plans."

By Claire Archer

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