The BDO's optimism index intends to put forth trading figures that the UK businesses are likely to achieve in the quarters ahead. According to the past records, the index had never fallen below the 95 mark since July 2009, however, according to recent reports the index has fallen from 95.5 in July to 93.1 in August.

Therefore, there is an impending fear that the economy might contract at the end of this year as the accountants and business advisers assert that the economic prospects fail to show signs of improvement.

Besides BDO's optimism index, the Company's output Index too is said to have fallen from 99.8 in July to 97.8 in the month of August. This Company's output Index is said to keep a record of the UK businesses' turnover expectations.

"What's so disappointing is that businesses seem to be convincing themselves that things are going to get really tough in 2011, and are deferring new hires and investment decisions as a result", says Peter Hemington, partner at the firm.

He further remarked that the actual impact of the fiscal consolidation was likely to be seen after 2012 and that the UK would see a reasonable level of growth in the year 2011.