The BDO Output index, which measures the state of companies' order books, fell from 95 in July to 93.6 in August, which suggests that the economy could contract in the third quarter.
The score of 93.6 is the lowest score for 26 months, only scores above 95 indicate growth.
Peter Hemington, partner at BDO said: "It's worrying to see such a reliable growth indicator fall to a two-year low.
"Our predictions should serve as a wake-up call to policymakers that action must be taken to avoid economic contraction.
Mr Hemington also said the Bank of England may likely be forced to implement quantitative easing, having voted against renewing its quantitative easing programme last week.
"Those asking for a rise in interest rates are doing so prematurely. What is needed and what we have long called for is a further round of quantitative easing, and it is heartening to see this stance becoming an increasingly credible position. The MPC must therefore give QE3 profound consideration if we are to arrest the forecasted economic slump,” he added.
However, the forward-looking optimism index was more optimistic, coming in at 95.5, forecasting slight growth for the beginning of next year.
BDO said the index has been “teetering around the 95 point for three consecutive months”.
There was also some optimism regarding expectations of inflation, which showed its first monthly fall since December 2010.
The reports from BDO follows a report by Organisation for Economic Co-operation and Development (OECD) who slashed its growth expectations for the UK and said the country was at "significant risk" of a double-dip recession.
"For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
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