UK Economy May Face Double Dip: BDO

Sarah Woodman, Global events journalist
August 17, 2010 /

The UK economy is likely headed for a double dip in recession, according to an analysis done by BDO.

BDO is one of the top consultancy firms of the country and is just right after the Big 4 firms which dominate UK’S large audit market.

BDO has said that the UK economy will a double dip, with monetary and fiscal policies not likely to spur recovery from the recession.

BDO’s Business Trends report uses the data collected from more than 11,000 respondents to its surveys. The firm employs near about 5 million people in the UK to help them in the conduction of the surveys.

This month’s Business Trends indices have suggested that a significant downturn of the UK economy is fast approaching.

The firm’s Optimism Index has shown that it expects economy to drop significantly for the rest of the year. It also expects it to fall towards zero in the fourth quarter of the year. The firm however predicts that the economy will enter 2011 with a strong downward trend.

The Output Index of the firm shows a significant drop from 101.6 in June to 99.8 in the month of July. This index is used to measure corporate order books.

Peter Hemington, who is a partner at BDO, says that the BDO Optimism Index has continued falling since the past few months. He says that this drop is affecting what businesses say about the current activity levels.

Hemington added: ‘We now believe that there is a substantial risk of the UK falling into a “double dip” recession in early 2011.’

In response to the findings, BDO is calling on the government on its duty to make the role of public spending clear. It has also called for the Bank of England to add £50 billion to its quantitative easing programme.

 

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