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Business Optimism At All-Time Low Says Survey

(c) Sky News 2013

An index which predicts British business optimism has fallen to its lowest level since the it began 21 years ago, prompting fears of a 'triple-dip' recession occurring.

BDO's Optimism Index, which predicts business performance two quarters ahead, fell to 88.9 in January from a reading of 90.3 in December.

It is the eighth consecutive month that the index has remained below 95.0, the mark which indicates growth.

This suggests the economy will struggle to grow in the first quarter of 2013, following the recently announced negative growth in the final three months of 2012.

As a result, there is an increased risk of a triple-dip recession taking hold.

Meanwhile the report's Output Index, which predicts short-run turnover expectations, also supports this, falling from 93.1 to 92.3 last month, further away from the 95.0 mark indicating growth.

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

"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."

However its complementary Employment Index rose to 95.1 in January from 93.0 in December, taking the index above the 95.0 mark that indicates employment growth.

Last Friday the Recruitment and Employment Confederation, along with KPMG, released a report revealing a salary spike trend based on employers struggling to find enough qualified staff.

The BDO index has also showed hopeful signs amongst the UK's manufacturing sector of possible recovery.

But the report's author warned that coalition policy needs to drive greater economic expansion.

Mr Hemington 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."