UK services sector confidence hits 12 month high after vaccine rollout success
The ongoing success of the vaccine rollout programme in the UK led to a 12-month high in services sector confidence, new data has found.
According to the latest Business Trends report from accountancy and business advisory firm BDO, its services optimism index surged 7.53 points in February to 94.13, as the number of Brits getting inoculated against COVID-19 continued to climb.
The growth of the index, which includes a range of industries from retail and hospitality to professional services, suggests that many businesses had anticipated a significant return to normality even before the UK government outlined its lockdown roadmap at the end of last month.
Business confidence is expected to be boosted further by the continuation of the chancellor’s expansionary fiscal stance for the coming months. During Wednesday’s budget he said there was “light at the end of the tunnel” for a post-pandemic recovery.
His blockbuster announcement contained a raft of changes to taxes and welfare, alongside new spending plans.
Rishi Sunak detailed what amounts to stealth tax rises on income, inheritance, capital gains, and pensions, while at the same time offering more support to low-income workers and those struggling due to COVID-19.
However, manufacturing confidence remained muted last month, falling a marginally 0.27 points to 83.99, as vaccine optimism was offset by Brexit disruption and border tensions.
The report also revealed that the UK labour market showed signs of stabilisation as the government’s furlough scheme is extended until September. The BDO employment index rose from 107.64 in January to 107.68 in February - the first increase in the employment index in four months.
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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%, there is reason to believe this optimism can be sustained as we gradually emerge from the depths of lockdown.”
Some 21 million people have now been vaccinated (with a first dose) so far in the UK, with the majority of over-80s receiving the jab, as well as elderly residents in care homes.
As part of the vaccines delivery plan, the government hopes that all adults can be vaccinated by the autumn and plans to have a total of 2,700 vaccine sites across the country.
The official estimate of the R number — how many people each infected person then reinfects — is currently between 0.6 and 0.9 for the UK, with new infections falling by 2% to 6% per day.
Britain was the first European nation to pass the 100,000 COVID deaths landmark and the fifth country in the world after the US, Brazil, India and Mexico.
However, the number of new virus cases has plunged from a peak of 66,405 a day on 11 January to 6,573 on Thursday.
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