News that a Covid-19 vaccine is to be rolled out has sparked a surge in confidence among UK business leaders, according to the findings of a survey by the Institute of Directors (IoD), released today.
But, despite a marked change of mood in the wake of last week’s announcements, the organisation said it found many company bosses are still wary about prospects for the year ahead.
And it called on the government to introduce a number of measures to help support the economy through the winter.
The IoD’s Confidence Tracker survey of more than 720 directors, carried out between November 26 and last Friday, recorded a leap from +8 to +24 in the “net optimism” measure relating to the 12-month outlook for their organisations. It was the first time the figure had reached such a level since before the first coronavirus lockdown in March.
Just over two-thirds of business leaders questioned said news of a vaccine improved their company’s prospects for 2021. The monthly survey also found a significant improvement in directors’ sentiments about the economy, although they were still firmly at the red despite a rise from -57 to -31.
Net investment and employment intentions for the year ahead remained subdued, at +3 and +2 respectively.
After Covid-19, Brexit uncertainty was the top factor having a negative impact on business confidence, the survey found.
The IoD said today that 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 said the government should boost support for hiring and investment to lay the foundations for a swift economic recovery, as well as providing Brexit vouchers for small and medium-sized firms to access legal or specialist advice to help them adjust.
Tej Parikh, the IoD’s chief economist, 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.”
He continued: “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.”
