According to new data, the UK is nearing contraction with an outlook that remains bleak. Accountancy firm BDO released the results of the latest Business Trends survey, to reveal that the UK is close to a further recession. Calls are being made for the Bank of England to inject more cash into the economy.
The Output Index measures the expectation for turnover three months in advance, and it has decreased for the seventh month in a row. December’s figure was 91.4 against the November figure of 92.5. The figure which is crucial and indicates growth is 95.0, and figures have been below that number since July last year. The Optimism Index produced by the accountancy company, has also shown a drop in figures as the December figure decreased to 91.5 in December, down from November’s figure of 92.5. According to the company, the only cause for optimism is that pressures from inflation are starting to ease.
A partner at BDO, Peter Hemington has called for decisive action from the government to avoid risk of recession. He said:
“To arrest the forecasted slum, we urge the Bank of England to consider a further round of quantitative easing, and we encourage the banks to continue to step up their lending to UK businesses.”
Calls were also made for investment from the private sector into infrastructure, encouraged by incentives from the government. Growth of the UK economy was 0.1 percent in the last quarter of 2011, half the growth figure for 2010. The Bank of England stated that the quantitative easing programme wouldn’t be altered currently.
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