Jan. 14 (Bloomberg) -- An index of U.K. business confidence and a gauge of output both fell in December, suggesting the economy may contract in the coming months, according to BDO LLP.
The sentiment gauge fell to 90.3 in December from 91.4 the previous month, the accountancy firm said in a report today in London. A measure of output decreased to 93.1 from a reading of 93.4, below the 95 mark that points to positive growth one quarter ahead. The decline suggests “the U.K. may experience further contraction in the first quarter of 2013, potentially resulting in a triple-dip recession,” BDO said.
Britain’s recovery is struggling to take hold after the economy emerged from a recession in the third quarter. The turmoil in the euro area is adding to pressures at home, as the government’s fiscal squeeze curtails domestic spending. The Bank of England last week kept its emergency bond-buying plan on hold as it assesses the effect of a credit-boosting plan introduced in the summer.
“Many U.K. businesses are in a state of limbo,” Peter Hemington, partner at BDO, said in an e-mailed statement. “Ongoing volatility in the U.S. and euro zone, coupled with sluggish U.K. GDP growth, is leaving them reluctant to hire and make plans for growth.”
An index of employment intentions fell to 93 from 93.1, the report showed. The BDO indexes are calculated by the Centre for Economics and Business Research from a weighted average of all the U.K.’s main business surveys in the last month.
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