Double-dip recession fears backed

The UK could be heading for a double dip recession if current economic trends fail to improve, research indicates.

The country's economy looks set to contract during the final quarter of the year, with businesses becoming increasingly pessimistic about trading prospects, according to business services firm BDO.

The group said its optimism index, which reflects how UK businesses expect trading to develop two quarters from now, had fallen to 93.1 in August from 95.5 in July.

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It said this level had not been seen since the deepest part of the previous recession between November 2008 and July 2009.

It was the first time the index had dropped below the crucial 95 mark since July 2009, suggesting the economy may contract during the final quarter of the year.

The group's output index, which tracks businesses' turnover expectations, also showed a marked drop during August, falling from 99.8 in July to 97.8, pointing to "sluggish" economic growth during the third quarter.