Output expectations tumble for first time in seven months
HOPES for a speedy economic recovery will be dealt a blow today when a report shows that output expectations have fallen for the first time in seven months.
The latest Business Trends report from BDO shows a decrease in the Output Index from 96.3 to 95.8, while the Optimism Index also dropped from 96 to 95.8.
But the recovery remains on track, with both indices remaining above the critical 95 threshold, which indicates increasing output ahead.
Net trade – the value of exports versus imports – is also increasing, and businesses are focusing less on stock reduction, the report says.
However, the report cautions that structural weaknesses could affect any revival, with cautious consumer spending, rising unemployment and constrained corporate lending all threatening to hinder demand.
Peter Hemington, partner at BDO, said: “We are on the home straight out of the recession but the race to recovery is a marathon not a sprint.
“To assist the lending recovery… the Bank of England’s asset purchase programme should be continued to its full allowance and possibly extended.
“Further tax increases unfortunately are inevitable but public spending needs to be cut.”