News of a vaccine has lifted business spirits, but directors remain wary about the year ahead, the IoD’s latest Confidence Tracker reveals.
- Business leaders’ net optimism in the 12-month outlook for their organisations shot up from +8 to +24, marking a return to pre-first lockdown levels.
- Around two thirds (64%) of company directors polled said news of a vaccine improved their organisation’s prospects for 2021.
- Directors’ sentiments about the economy have also improved significantly, but remain firmly in the red (-31, up from -57).
- Net investment and employment intentions for the year ahead remained subdued (+3 and +2 respectively).
- After Covid-19, Brexit uncertainty was the top factor having a negative impact on business.
The IoD said the results strengthened the case for supporting restricted parts of the economy through the Winter, and called for larger grants for firms in supply chains where demand is curtailed by restrictions, alongside more discretionary support for those left out of previous schemes.
The Institute also recommends that the Government boost support for hiring and investment to lay the foundations for a swift economic recovery, as well as providing Brexit vouchers for SMEs to access legal or specialist advice to help them adjust.
Tej Parikh, Chief Economist at the Institute of Directors, said:
“At long last, business leaders have something to aim at. The arrival of a vaccine provides some light at the end of the tunnel.
“The prospect of a recovery makes it all the more important to support businesses for the time being. It would be a crying shame to see viable companies collapse just as the vaccine was round the corner.
“The Government has taken important steps, not least by extending the furlough scheme and reinstating insolvency protections. However, sectors that are restricted in the tier system aren’t out of the woods yet, and the grant support should be strengthened. Meanwhile, many of those that have fallen through the gaps of the furlough scheme and SEISS are in a dire situation.
“The Government has so far prevented the worst of potential job losses, but unemployment has still risen. Cutting National Insurance would help give directors the extra capacity to create new vacancies and drive jobs growth.
“As we emerge from the twin challenges of Covid and Brexit uncertainty, we’ll need to make up for lost time on investment. This may be tricky, demand may not spring back immediately and many firms will have to deal with a debt hangover. Widening SME tax reliefs for productivity-enhancing technology would be a smart move from the Treasury.”
Full survey results
728 respondents, conducted between 26 November - 4 December 2020.
How optimistic are you about both the wider UK economy and your organisation over the next 12 months?
Neither optimistic nor pessimistic
Wider UK economy
Comparing the next 12 months with the last 12 months, what do you believe the outlook for your organisation will be in terms of:
Which of the following factors, if any, are having a negative impact on your organisation?
Uncertain trading status with the EU
Global economic conditions
Compliance with Government regulation
Skills shortages/employee skills gaps
Difficulty or delays obtaining payment from customers
Cost of energy
A few viable Coronavirus vaccines have now been announced. To what extent does this change your primary organisation’s outlook for 2021?