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UK Double-Dip Recession Is on the Cards: Survey

More than two thirds of business managers feel that a UK recession is now likely to happen with business confidence at a low, according to a new report.

Recession-themed newsprint cuttings
Recession-themed newsprint cuttings

The report by the Chartered Management Institute in the UK found that 68 percent of those managers who responded to its Economic Outlook survey felt that a double-dip recession was likely to happen.

Business confidence was also low with more than 40 percent believing that stock market performance would decline in the next 12 months.

92 percent felt that UK GDP (gross domestic product) would decline in the next twelve months.

"There is a fear that the private sector is not equipped to help with economic growth, with only 8 percent feeling that GDP will grow next year.

Respondents are frustrated that things are not moving fast enough but they think that the government is right with its program of cuts," Mike Petrook, head of public affairs at the CMI, told CNBC.com.

These fears have strengthened in recent weeks. IMF forecasts were revised downwards for the UK economy from 1.7 percent to 1.1 percent in 2011.

The UK Chancellor George Osborne announced on Monday that the government would look at a number of options to get the economy moving, including directly helping business through "credit easing", where the Treasury would effectively lend money in exchange for corporate bonds.

"The UK economy is basically stagnant right now, there are few chinks of light. We think that unemployment will probably get worse, so it's not unreasonable that George Osborne is saying that we need some kind of stimulus plan," Charlie Parker, investment editor at Citywire told CNBC.

However, he said that despite the cuts having choked up growth, people seemed to be willing to give him the benefit of the doubt on his plan to help the UK economy in the longer term.

Negative sentiment was to be expected and another round of quantitative easing was more than likely another analyst told CNBC.

"The UK economy is going nowhere fast at the moment and GDP growth in third quarter was well below its potential level.

The Bank of England has to respond here and unless things turn around very quickly they are going to act this week," Chris Scicluna, deputy head of economic research at Daiwa Capital Market told CNBC Tuesday.

He added that the government needed to implement broader macro economic policies to boost GDP.

"The UK has a shortfall of aggregate demand it is macro measures, broader fiscal policies like monetary policies like more quantitative easing that can provide support," he added.