Business optimism for coming year highest since pandemic began amid vaccine hopes - Bank of Scotland

News of the first effective Covid-19 vaccine has pushed business optimism to levels not seen since the start of the pandemic, a Bank of Scotland report today reveals.

Despite an upturn in confidence, the UK’s economic recovery from coronavirus remained behind the global benchmark in November. Picture: Jeff J Mitchell/Getty Images

Despite that upturn in confidence, the UK’s economic recovery from coronavirus remained behind the global benchmark in November, with tourism and recreation businesses falling furthest behind as lockdowns and restrictions battered the hospitality industry.

On an upbeat note, ten out of 14 UK sectors recorded output growth last month, with the biggest month-on-month upticks seen among manufacturers of technology equipment and household goods.

The Bank of Scotland UK Recovery Tracker, working with IHS Markit, provides an insight into the shape and pace of the UK’s recovery following the disruption caused by Covid-19.

Jeavon Lolay, head of economics and market insight at Lloyds Bank Commercial Banking, part of Bank of Scotland owner Lloyds Banking Group, said: “While the performance of UK services businesses has been acutely affected by the tightening of restrictions and national lockdown measures, there were also positive signs of resilience for the broader economy as a range of sectors reported stronger growth in November.

“It shows that not only were the mandatory restrictions less onerous than in the spring but that businesses have also adapted well during the pandemic.

“The news of an effective vaccine saw business expectations improve markedly last month, potentially helping to reverse the fortunes of consumer facing industries that have borne the brunt of Covid-19 restrictions. The start of vaccinations in December should help sustain and hopefully bolster this increase in confidence for the year ahead.”

Ed Thurman, managing director, global transaction banking, Lloyds Bank Commercial Banking, added: “It’s encouraging to see news of a viable vaccine boost business confidence for the next 12 months.

“We are nearing the end of a year that has forced firms to dig deeper than ever before, and lean on the resilience and innovation they have always shown in the face of adversity.

“But we are not out of the woods yet. The rollout of the vaccine will take time, and the path of the UK’s recovery from Covid-19 will continue to be determined by a far-reaching set of factors, including the end of the Brexit transition period on December 31.”

News of the first effective coronavirus vaccine made UK companies more optimistic about the UK’s recovery. Business optimism about the coming 12 months was the highest recorded since the start of the pandemic.

The number of UK businesses linking news of an effective vaccine to an expected rise in their output over the next year was more than five times higher than in October.

The improved outlook was greatest among the sectors most affected by Covid-19 lockdown measures. Almost two thirds (64 per cent) of tourism and recreation firms and more than two fifths (43 per cent) of property businesses predicted their output would rise in the next 12 months, up from 41 per cent and 30 per cent respectively in October.

The software and services sector also registered a large uptick in confidence month-on-month (69 per cent anticipate growth versus 55 per cent in October).

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