Confidence in service industry at 12-month high as restaurants and shops prepare for reopening
Business confidence has risen to a 12-month-high in Britain's crucial services sector as the vaccine roll-out continues to pick up speed and companies prepare for a return to normal.
The BDO Services Optimism Index hit 94.13 in February, up from 86.6 in January, as businesses were given “a much-needed shot of relief” by the ongoing vaccination efforts in the country. Services dominate the UK economy and include retail, hospitality and finance.
Almost 22m people across the UK had received their first dose of vaccines by Saturday. The Government has said all adults will be offered the Covid-19 jab by the end of July.
The spike in business confidence recorded by BDO came even before the Government set out the lockdown roadmap at the end of February, as companies began planning for a reopening following sharp falls in cases. Under the current plans, non-essential retail and restaurants will open as soon as April 12.
Accountant BDO said business confidence was likely to be bolstered by Chancellor Rishi Sunak’s Budget pledges to continue the taxpayer-funded furlough scheme until September, and dole out up to £5bn of grants to companies. He is also keeping VAT on most hospitality sales at a reduced level of 5pc to support the recovery.
Kaley Crossthwaite, a partner at BDO, said: “With business lifelines extended in the shape of the prolonged furlough scheme, and an extra dose of support provided to hospitality via extensions in business rates relief and the VAT cut to 5pc, there is reason to believe this optimism can be sustained as we gradually emerge from the depths of lockdown.”
The extension of the furlough scheme over a spike in unemployment, BDO said. The BDO Employment Index rose to 107.68 in February, up from 107.64 in January – its first increase in four months.
However, confidence in the manufacturing sector was dented by Brexit border disruption. The Manufacturing Optimism Index was down by 0.27 points in February at 83.99, as tensions over the trading route between the EU and Great Britain offset any lift from the vaccine roll-out.
However, confidence in the manufacturing sector was dented by Brexit border disruption.
