LONDON: Businesses in the UK are battening down the hatches for the stormy days ahead, according to a new survey that ranks confidence in the economy at a 16-year low.

The Business Trends Report, from accountants BDO Stoy Hayward, indicates confidence over the next three months fell to 97.7 in June from 98.3 in May – the lowest level since June 1992 and the European exchange rate mechanism débacle.

The figures suggest that companies are expecting annualised economic growth of 1.3% through the next three months, lower than the government's forecasts of between 1.75% and 2.25% for 2008.

Says Stoy Hayward spokesman Peter Hemington: "UK businesses are struggling to see any light at the end of the tunnel."

He warns: "An interest rate rise next week aimed at curbing inflation could be crippling for business and could worsen the effects of the economic slowdown."

Data sourced from BBC Online; additional content by WARC staff