Business confidence soaring as lockdown eases

Driven by the success of the COVID vaccination programme – 23.6m UK citizens (over a third of the population) have now had both jabs – companies across most business sectors are regaining their confidence. The relaxation of lockdown restrictions in April and May has been the tangible proof of recovery that business managers have been waiting for, lending weight to Government reassurances that its road map for a more widespread lifting of restrictions in June is still on course.

The latest LinkedIn Workforce Confidence Index (which ranges from -100 to +100) stands at 22, a rise of 5 points since the beginning of the year; LinkedIn’s Financial Confidence Index has risen from 8 to 14. However, perhaps the most notable feature is that SMEs (smaller businesses employing less than 200 people) are considerably more optimistic than larger firms (those employing 10k or over). The SME Overall Confidence Index has risen by 10 points to 31 since the start of 2021 while the equivalent Large Businesses Index has dropped by 2 points to 21. The pattern is consistent throughout; SMEs are more confident about jobs, finance, and career prospects than their larger counterparts.

If you dig down into age groups, it is probably no great surprise that the ‘Baby Boomers’ – i.e., those who have probably had both doses of the vaccine – are significantly more relaxed about the post-pandemic future than ‘Millennials’. Meanwhile, the even younger generation, the so-called Z group, are more optimistic than the older groups about the opportunities to develop their skills and grow their income. And, for the students of statistics, it appears women are overwhelmingly more worried about overall job security than their male colleagues but, bizarrely, are more optimistic overall.

However, whatever you make of the granular details, there is no doubting that the general direction of our collective outlook is upbeat. Statistics from accountants and business advisory firm BDO show that confidence in the services sector has risen dramatically – hardly surprising, following the reopening of indoor hospitality and leisure.

But perhaps even more encouraging has been the performance of the BDO Manufacturing Optimism Index, which was up by almost 3 points (2.97) to 99.79 in April. It seems that ongoing concerns about the consequences of Brexit on supply chains have been overridden by other, more positive factors: e.g., the ‘super-deduction’ financial support measures contained in the last Budget and the very real prospect of the Government being able to stick to its timetable out of lockdown. As we have said before, UK manufacturing is on a roll – and it’s good to be in the mix.