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Business leaders’ confidence surges on vaccine news

07 Dec 2020

happy directors

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?

 

Very optimistic

Quite optimistic

Neither optimistic nor pessimistic

Quite pessimistic

Very pessimistic

Wider UK economy

3%

22%

18%

34%

22%

Your organisation

8%

37%

34%

16%

5%

 

Comparing the next 12 months with the last 12 months, what do you believe the outlook for your organisation will be in terms of:

 

Much higher

Somewhat higher

No change

Somewhat lower

Much lower

Don't know

Revenue

9%

38%

19%

23%

9%

1%

Cost

4%

49%

34%

11%

2%

1%

Business investment

4%

24%

46%

15%

10%

2%

Employment

3%

23%

49%

18%

6%

2%

Employee wages

2%

29%

55%

9%

3%

2%

 

Which of the following factors, if any, are having a negative impact on your organisation?

Coronavirus outbreak

73%

Uncertain trading status with the EU

49%

Global economic conditions

47%

Compliance with Government regulation

35%

Business taxes

31%

Skills shortages/employee skills gaps

30%

Broadband cost/speed/reliability

29%

Employment taxes

28%

Difficulty or delays obtaining payment from customers

22%

Transport cost/speed/reliability

19%

Cost of energy

15%

 

A few viable Coronavirus vaccines have now been announced. To what extent does this change your primary organisation’s outlook for 2021?

Significantly improved

18%

Somewhat improved

48%

No change

32%

Somewhat worse

1%

Significantly worse

0%

Don't know

1%

Coronavirus Hub - IoD

Contact Press Office

Euan Holmes, Press Officer

020 7451 3280


Press office

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