Business confidence among UK companies has seen its largest drop since 1995, according to BDO's Business Trends survey.

The Business Trends survey from accountants BDO fell to 97 in May from 103.3 the previous month - the largest drop since the survey began.

BDO's survey is compiled by the Centre for Economics and Business Research and covers 11,000 companies from a range of industries.

"The government has understandably been keen to emphasise the extent of the sacrifices that we all will need to make as public borrowing it brought under control," said Peter Hemington, partner at BDO.

"But there is a significant risk that the rhetoric has begun to impact on business confidence, and fears of the economic impact of spending cuts may be causing businesses to rein back on growth plans."