News of the accelerating pace of the national COVID-19 vaccination programme and with the Brexit transition period now behind us a large poll of ICAEW members agree that business prospects are improving.
Although output is still currently par, and businesses report the sharpest fall in employment for over a decade, confidence rebounded in the second half of October and has held up since then.
This recovered confidence occurred despite a spike in COVID-19 coronavirus recorded deaths in January and the current national lockdown.
The ICAEW says: “It seems likely that worries over infection rates have been balanced by positive news about vaccine approvals and distribution.
“Companies therefore expect to see strong recoveries in sales in 2021, especially in the domestic market, leading to higher employment levels, some recovery in profits, and modest increases in investment.
“The recoveries will only partially offset the 2020 declines, so sales in 2021 are likely to remain well below pre-pandemic levels. Considerable uncertainty remains, with possible adverse consequences for confidence.
“Among privately-owned companies, a key concern at the onset of the pandemic was whether Small and Medium Sized Enterprises (SMEs) might be especially vulnerable to the downturn in activity. Instead, they experienced a slightly shallower fall in domestic sales and profits in the year to Q1 2021 than larger companies. A smaller proportion of them cite customer demand as a growing issue. The confidence of SMEs about future business conditions is now marginally higher than for large privately-owned businesses.”
The results are based on 1,000 telephone interviews among the Institute of Chartered Accountants in England and Wales members covering a range of UK sectors, regions, and company sizes, ensuring a representative picture of the UK economy. The interviewing is continuous, the latest findings are based on the period between 19 October 2020 and 15 January 2021.
You can read the full ICAEW Business Confidence Monitor report here.
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The above is accurate as at 18 February 2021. The information above may be subject to change during these ever-changing times.
The content of this note should not be considered legal advice and each matter should be considered on a case by case basis.