Optimism among business leaders is at a record high based on hopes that Britons will commence a multibillion-pound summer.
A chance to go on a spending frenzy is here after being freed from lockdown.
UK Businesses are Recovering
Non-essential shops and other businesses in England reopened for the first time since January. Three separate studies suggest that the bounce back in the economy could be broader and faster than previously expected.
Small, medium, and larger FTSE companies all reported improved sentiment. Only exporters, affected by Brexit as well as coronavirus, are suffering a downturn in fortunes.
Greater optimism has been spurred by expectations that consumers will unleash a spending spree in the summer.
The Centre for Economic and Business Research (CEBR) study has predicted that savers will unlock more than a quarter of £192bn in lockdown rainy-day funds this year. This adds £50bn to consumer spending.
About £314m is expected to be spent in the newly reopened hospitality sector in this week alone.
The Post Office figures showed that Britons withdrew £590m in cash in March, the highest monthly figure since September.
Deloitte’s survey of bosses at some of the UK’s biggest public companies found that the potential spending boom helped fuel record levels of optimism among chief financial officers in charge of companies’ purse strings.
Respondents said they now expected a “strong recovery in profits over the next 12 months, with profit expectations back to the previous high seen in mid-2014 at the top of the economic cycle”.
Forecasts for hiring and investment at the firms, which account for about 22% of London-listed companies’ value, are at their highest levels in nearly six years, it said.
The accounting company BDO backed the assessment, saying its jobs market tracker had reached a three-month high.
The Federation of Small Businesses (FSB) said it had found the greatest level of optimism among its members since 2014.
Just over half (58%) of the 1,700 companies questioned expect their performance to improve this quarter, while 31% expect it to worsen.
The FSB’s small business index has risen to +27.3 for the first quarter of 2021.
A marked improvement on the -49.3 score at the end of last year.
Business Activities are Higher
NatWest’s data showed that business activity rose in 11 of 12 UK regions over the last three months.
Growth was led by the East of England, which reported a record high, ahead of the West Midlands and Yorkshire & Humber.
Northern Ireland was the only region to record a decline.
The surveys will be welcomed by Andy Haldane, the Bank of England’s chief economist, who surprised many in February when he claimed that the UK economy was like a “coiled spring” ready to explode if conditions were right.
Last week the FTSE 250 index climbed above its pre-pandemic level of 22,000. The FTSE 100 is still lagging behind its March 2020 high, though not by much.
Mike Cherry, chairman of the FSB, said: “It’s fantastic that our shops, hairdressers and gyms can get back to doing what they do best all over England from today.
“Some restrictions easing in other parts of the UK as well.”
“The certainty provided by the government’s roadmap is filling many small business owners with renewed confidence.”
“We live in the hope that the virus stays in retreat so the remaining indicative dates for unlocking can be met.”
“Thus enabling our vital nighttime economies, offices and travel and tourism businesses to get back to it as well.”