Small, medium-sized, and large businesses are becoming more confident in the economy following news of a Covid-19 vaccine roll-out.
According to new research from the Bank of England – conducted just after vaccine announcements from Pfizer and Moderna – 67 per cent of businesses viewed overall economic uncertainty as high or very high in November, compared to 75 per cent in October.
Business sales are also forecast to rise over the coming months, as the vaccine becomes more widely available.
The business-owners surveyed by the Bank of England said that they expect sales to rise from -15 per cent in the fourth quarter of 2020, to -11 per cent in the first quarter of 2021, and to minus two per cent by the end of the second quarter of next year.
In 2022, businesses told the Bank of England that they expect a one per cent rise in sales, while investment is expected to be around three per cent lower.
Meanwhile, just six per cent of businesses said that they were fully prepared for the end of the transition period with the EU on 31 December 2020. 62 per cent said that they were “as ready as they can be”, while 27 per cent said that they were partially prepared. Four per cent said that they were not at all prepared for Brexit.
‘’The vaccine breakthroughs have given businesses a shot of confidence that the economy will warm up faster from the cold shock of Covid,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
“Brexit, which had taken a back seat, is again starting to weigh on minds as we fast approach the end of the transition period with no deal in sight.
“The Bank of England’s forecasts for growth are based on the assumption that some kind of deal will be reached in the protracted Brexit negotiations, but even if there is an agreement, it had already forecast that leaving the EU will shave one per cent off growth next year.
“Given the huge contraction the economy has experienced, the UK still faces a long road to recovery with the potential of further setbacks along the way, if there are problems with the mass roll out of vaccines. But there is a lot more confidence across the business community that better times will slowly start to appear in 2021.’’