Output slip suggests UK economic recovery has stalled

The latest Business Trends report by professional service firm BDO showed a fall in both expected output and optimism.

BDO's Output Index dropped from 96.3 to 95.8, the first time it has fallen in seven months, suggesting "more pain to come on the road towards growth".

The survey also showed a marginal drop in business confidence, which had also been increasing, with the Optimism Index dropping from 96 to 95.8.

But BDO said both indices remain above the crucial 95 mark, which indicates increasing output ahead, confirming the overall trend of improvement.

Peter Hemington, a partner in BDO's corporate finance division, said the recession was ending but that a recovery could be fragile, and it was not time to withdraw support – such as the government's policy of quantitative easing – from the economy.

"The race to recovery is a marathon not a sprint," Hemington said. "To assist the lending recovery and counteract expected tax rises and spending cuts, the Bank of England's asset purchase programme should be continued to its full allowance and possibly extended."

BDO said the trends survey showed that businesses are starting to focus less on stock reduction, and that net trade – the value of exports against imports – is increasing.

"Both of these factors helped support a return to growth in the third quarter," the firm said.

But it warned that a number of structural weaknesses were hitting business, including cautious consumer spending, rising unemployment and sluggish business-to-business demand.