According to the latest ICAEW Business Confidence Monitor (BCM) published recently, business confidence has hit its highest level since the survey was launched 17 years ago. Sentiment tracked by the BCM found optimism at 38.5 on the quarterly index. The record reading for the second quarter of 2021 signals that a large majority of companies surveyed expect economic conditions to improve over the next 12 months, with record domestic sales forecast.
The continued success of the vaccine rollout programme in the UK is likely to explain why businesses are so confident for the year ahead, the ICAEW (The Institute of Chartered Accountants in England and Wales) said.
Business confidence had returned to positive territory in Q1 and the record levels this quarter reflect rising optimism about large parts of the economy reopening. The findings from the BCM come after figures from the Office for National Statistics (ONS) 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.
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Michael Izza, ICAEW Chief Executive, said: “Business confidence has hit a record high, as companies look forward to the economy reopening. Companies now expect exceptional levels of domestic sales, as well as rising profits and increasing investment. They are thinking about hiring staff. Much of this depends on consumer confidence also lifting and households being ready and willing to spend.”
He added: “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.”
Businesses’ confidence across all UK nations and regions has markedly improved in Q2 2021, particularly so in the West Midlands, the region which suffered the steepest falls in both domestic sales and exports over the past 12 months.
Here at Charter Tax, we were encouraged to read that the South East is another particularly confident region. Both domestic sales and exports fell at more modest rates than nationally in the year to Q2 2021, and South East businesses are also hopeful about their domestic and export sales in the year ahead. Growth in the former is set to outpace all other regions, and the latter will only be exceeded by Scottish companies.
Find out more about the survey here: https://www.icaew.com/technical/economy/economic-insight/business-confidence-monitor-national
