- The business confidence level was up by 17 percentage points to minus 4 per cent in December.
- Prevailing uncertainties in the trading environment around the UK’s new trading relationship with the EU have been offset by the news of the vaccine progress
- Due to increased optimism after the permission of Covid-19 vaccine, the GfK consumer confidence index has also increased to -26 in December
The UK, like many other nations, has underpinned the hopes on potential Covid-19 vaccines and expect them to play a vital role in helping the country come out of recession by shaping the economic recovery in the near future. FTSE 100 listed banking group Lloyds Banking Group Plc’s (LON: LLOY) has pointed out that the vaccine progress has bolstered this month’s confidence figures.
According to the survey, December witnessed the biggest monthly improvement since the last four years in British business confidence level. The survey involved over a thousand firms. The developments with regard to the vaccines have led to the positive sentiments being felt by the businesses.
The monthly business barometer of Lloyds rose to a new high since March, before the coronavirus pandemic disrupted the UK economy. The business confidence level was up by 17 percentage points to minus 4 per cent in December.
Market experts suggest that the prevailing uncertainties in the trading arena around the new UK-EU trade deal have been offset by the news of the vaccine progress that has bolstered this month’s confidence figures.
Around one-third of the businesses are expected to go for job cuts next year, while more than 20 per cent of businesses were in favour of increasing the manpower. Large businesses showcased resilience and intended to end pay freezes.
However, the overall outlook of the UK economy seems to be a bit gloomy in the near term. According to the Bank of England, the UK economy has contracted by nearly 11 per cent so far since January 2020. This is the biggest plunge that the economy has seen in the last three hundred years. In addition, due to ongoing COVID-19 restrictions in place, the growth in 2021 is expected to be on a lower side.
Lloyd’s business confidence index had hit its lowest level in the week that started on 9 March touching minus 3 per cent since the depths of the global financial crisis of 2008. That time, according to Lloyds, business confidence level among companies sank by 17 points to 6 per cent and hiring intentions fell 12 points to 4 per cent in the span of the first two weeks of March.
GfK Consumer Confidence Survey
Due to increased optimism after the permission of Covid-19 vaccine, the GfK consumer confidence index has also improved to -26 in December, up by seven points from minus -33 in November. According to the survey from market researchers GfK, the confidence of UK households rose substantially, mirroring the improved business sentiment.
Aided by the European Commission, GfK’s Consumer Confidence Index measures consumer behaviour, including households’ financial positions and forward expectations of the general economic situation.
CBI Industrial Trends Survey
The manufacturing output was expected to fall over the next three months. However, the output was up to minus 6 per cent in December from minus 10 per cent in November.