The latest BDO Business Trends survey saw its optimism index surge from 86.6 in January to 94.13 in February as millions more people were vaccinated.
While the services sector outlook is buoyant, confidence among manufacturers edged marginally downwards.
BDO said any optimism felt by manufacturers due to the continued success of the vaccine rollout has been offset by Brexit border tensions that continue to affect the sector.
Elsewhere in the report, the employment index rose slightly from 107.64 in January to 107.68 in February, as the UK labour market showed some early signs of stabilising. While modest, this is the first increase seen in four months. With the furlough scheme now extended until the end of September, concerns of an immediate spike in unemployment have been staved off, paving the way for continued stability in the months ahead.
Kaley Crossthwaite, partner at BDO, said: “The speed of the vaccine rollout across the UK has given businesses a much-needed shot of relief.
“With business lifelines extended in the shape of the prolonged furlough scheme, and an extra dose of support provided to hospitality via extensions in business rates relief and the VAT cut to 5 per cent, there is reason to believe this optimism can be sustained as we gradually emerge from the depths of lockdown.”
Ms Crossthwaite said the renewed confidence was echoed in the Chancellor’s Budget speech last week, in which Rishi Sunak hailed “light at the end of the tunnel” for a post-pandemic recovery.
She said: “Having set out the broad shape of his tax policy for the next four years, business confidence is expected to be bolstered further by the continuation of the Chancellor’s expansionary fiscal stance for the coming months.”
The BDO data follows on from the UK services PMI report last week, which showed that sector is experiencing a degree of stability.
Although continued restrictions are disrupting the travel, leisure and hospital industry, there is evidence of pockets of growth within technology and business services.
Increased optimism also helped to stabilise employment, with only a small fall across services firms. Optimism across the services sector improved for the fourth consecutive month in February to its highest level since 2006.
Shore Capital analyst Katie Cousins said the PMI data showed confidence in business activity has been strengthened by plans to reopen the country.
“Additionally, positive progress with the vaccine rollout and the potential recovery in trade has also contributed to the PMI survey reporting an increase in business expectations. This is now the fourth consecutive rise recorded, and we believe this could be strengthened further when marginal pressures ease and if we see pent up consumer demand.”
The service sector accounts for around three-quarters of the UK’s economic activity. The BDO indices are calculated by taking a weighted average of the results of the UK’s main business surveys.
Taken together the surveys cover over 4,000 different respondents from companies employing approximately five million employees.