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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.<br /><br />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.<br />But the recovery remains on track, with both indices remaining above the critical 95 threshold, which indicates increasing output ahead.<br /><br />Net trade &ndash; the value of exports versus imports &ndash; is also increasing, and businesses are focusing less on stock reduction, the report says.<br /><br />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. <br /><br />Peter Hemington, partner at BDO, said: &ldquo;We are on the home straight out of the recession but the race to recovery is a marathon not a sprint.<br /><br />&ldquo;To assist the lending recovery... the Bank of England&rsquo;s asset purchase programme should be continued to its full allowance and possibly extended.<br /><br />&ldquo;Further tax increases unfortunately are inevitable but public spending needs to be cut.&rdquo;