Business confidence surged on vaccines before new lockdowns
The start of the UK’s coronavirus vaccination programme drove up business confidence to a nine-month high in December, a survey has shown.
However, the Lloyds business barometer gave a picture of businesses’ attitudes before the government tightened the lockdown rules over Christmas, bringing new uncertainty to firms.
Prime Minister Boris Johnson on Saturday announced London and large parts south east and east of England would be put into a new Tier 4 on Sunday. Non-essential shops have had to close, as well as hairdressers, gyms and other venues.
Before the announcement, businesses had become much more optimistic about the coming months, with the overall confidence gauge jumping by 17 points to minus four.
It was the largest monthly increase for more than four years, also reflecting the end of November’s England-wide lockdown.
However, it remained considerably below the long-term average after crashing at the start of the pandemic.
Vaccine offsets Brexit doubts
Hann-Ju Ho, senior economist at Lloyds, said: “The news of the vaccine progress has bolstered this month’s confidence figures, more than offsetting uncertainties around the UK’s new trading relationship with the EU.
“While confidence remains below average and significant challenges lie ahead, it is heartening to conclude a challenging year with a notable improvement in business sentiment and with the positive momentum hopefully continuing into 2021.”
Confidence in the manufacturing, construction and services sectors all rose sharply in December.
Yet Lloyds said confidence was still below average in all sectors. It also noted that retail optimism was well below normal entering the usually busy Christmas period.
Although businesses in large parts of the country now face an even tougher winter than expected, the development of vaccines has cheered firms, the public and markets.
The UK was the first country to approve Pfizer/Biontech’s vaccine. It started giving out the jab in early December.
Lloyds said firms’ views of the year ahead improved markedly in December. Vaccines caused firms to boost their employment plans, with confidence levels in this area moving to their least negative since March.