UK business confidence at lowest level in 21 years

Business confidence in the UK is down to its lowest level in 21 years, according to a survey, with rising  fears that the economy would struggle to avoid a new recession this year.

The BDO Optimism Index, which predicts economic activity during the next two quarters, was down from 90.3 in December to 88.9 in January.

This comes as the eight month in a row of the reading remaining below 95.0 – the level indicating economic growth.

The index is based on a number of UK business surveys, which include those by CBI, the Bank of England and the Chartered Institute of Purchasing and Supply in which 4,000 respondents were polled, from firms that employed a total of around 5million employees.

The fall in the index was a bad sign following the UK economy shrinking by 0.3 per cent in the final quarter of 2012. A first quarter of 2013 fall would see Britain back in recession - an unprecedented triple-dip.

BDO's Output Index, which forecasts short-term business turnover, was also a cause for concern as it fell from 93.1 to 92.3 last month.