Service sector confidence hits 12-month high on UK vaccine rollout
Service sector confidence has risen to a 12-month high amid hopes the UK’s successful vaccine rollout will fuel an end to lockdown measures.
The services optimism index, compiled by accountancy firm BDO, surged to 94.13 in February from 86.60 the previous month, marking its highest level since the Covid-19 outbreak last year.
The rising index, which covers a range of industries from retail and hospitality to professional services, suggests many businesses had forecast a return to normality even before the government outlined the UK’s roadmap for ending lockdown at the end of February.
More than 18m people across England — more than a third of the adult population — have already received a dose of the coronavirus vaccine, with the NHS now inviting people over 56 to receive their jab.
Business confidence was also given a further boost last week when chancellor Rishi Sunak outlined further support for sectors battered by the pandemic, including extensions to the furlough scheme and business rates relief and £5bn of grants for retail and hospitality firms.
However, the service sector confidence contrasted with the outlook for the UK’s manufacturing sector, which saw its index dip 0.27 points last month to 83.99.
This came as optimism about the vaccine rollout was offset by continued border tensions following Brexit.
“The speed of the vaccine rollout across the UK has given businesses a much-needed shot of relief,” said Kaley Crossthwaite, partner at BDO.
“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 five per cent, there is reason to believe this optimism can be sustained as we gradually emerge from the depths of lockdown.”
The report also showed a rise in BDO’s employment index from 107.64 in January to 107.68 last month as the UK labour market showed early signs of recovery.
While only a marginal increase, this marks the first time the employment index has risen in the last four months.