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BDO warns of UK double-dip recession

Accountants and business advisers BDO is warning UK businesses of a potential double dip recession towards the end of 2010 if current economic trends remain in place. The company believes that long-term prospects for the UK have not shown any improvement in the short-term and with BDO's optimism index recently falling to 93.1 in August against 95.5 in July there is real concern for the future. A sub-95 reading has not been seen since July 2009 which many believed was the bottom of the recent economic cycle.

However, there is some hope in the short to medium term with the possibility that businesses and consumers are holding off spending until the government reveals further public sector cost cuts in the latter half of 2010. As we saw prior to the recent election, consumer spending and investment by businesses literally ground to a halt as everybody waited to see what would happen. Whether we are in a similar situation regarding public-sector cost-cutting remains to be seen but we do need to see some improvement in the short-term.

Yet again, we are seeing very different surveys regarding the UK economy from a number of prominent parties around the world and in the UK. Who is right and who is wrong? The truth is that we will not know for some time to come.

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