20 May 2021
Today we are launching our Q2 ICAEW Business Confidence Monitor™ (BCM). The latest results show that business confidence has hit its highest level since a survey began in 2004. The continued success of the vaccine rollout programme in the UK and declining infection rates are likely reasons behind this. Links to the various reports are at the end of this email.
The findings come after figures from the Office for National Statistics showed the UK economy had contracted by 1.5% in the first three months of 2021, but gathered speed in March as lockdown restrictions were eased.
ICAEW’s CEO, Michael Izza, commented on the results –
‘The past year has been a terrible struggle for businesses and confidence was at an all-time low in early 2020. We hope this strong bounce back in confidence will in turn deliver a year of strong growth, and the BCM is the clearest indicator yet that the rest of 2021 could see a historically strong economic rebound from the unprecedented lows of the past year.
However, even as commercial life in this country unlocks, companies will be mindful of wider health and economic problems around the world which could yet dampen or even threaten the recovery for UK businesses.
The UK economy is also closely intertwined with other parts of the world and slower vaccination rates elsewhere could have an effect on our own economic recovery. For example, the shutting of production shifts in our automotive industry because of supply chain problems and subdued economic growth in the rest of the world show how much our economic recovery is reliant on the health of the rest of the world.’
Business Confidence Monitor Q2 key findings
- Economic recovery stalled through the winter but now looks to be resuming. Confidence is at its highest level on record, reflecting the success of the vaccine roll-out and the sharp decline in infection rates.
- Many sources of uncertainty remain, including the possibility that the much hoped-for consumer recovery will disappoint, and the existence of both economic and health risks emerging from other parts of the world.
- Companies nevertheless expect their domestic sales to grow strongly over the next 12 months, and their export sales to also rise. They expect profits to increase, in line with domestic sales, and they plan to take on more staff.
- Transport problems are a widespread growing concern, especially for those companies that export. Shortages of road and air-freight capacity, Brexit disruptions and the temporary closure of the Suez Canal are all likely factors.
- Regulatory requirements are also a large concern, with both Brexit and COVID-19 restrictions contributing at least slightly to the growth in challenges facing businesses.
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