Business confidence across Britain experienced the highest increase on a monthly basis seen in over four years during December, over rising hopes that the rollout of the COVID-19 vaccine could support economic recovery. Lloyds business confidence index surged to -4% in December, rising by 17 points since November and touching the highest level seen since the beginning of the pandemic back in March.

Confidence among businesses as well as households is on the rise, supported by news reports about the development and rollout of vaccines that offer hope for containing and overcoming the pandemic in the coming months. Last week, GfK also reported a spike in consumer confidence across Britain – with December’s reading seeing the highest jump in eight years.

Economic optimism also saw a 23-point increase from November to December, with the reading touching -5%. Meanwhile, trading prospects rose 11 points to -3% and employment prospects increased by 10 points to touch -10%. Business confidence among manufacturers surged out of negative territory in December, rising from -25% to 0.

Senior economist at Lloyds Bank, Hann-Ju Ho, observes, “The news of the vaccine progress has bolstered this month’s confidence figures, more than offsetting uncertainties around the UK’s new trading relationship with the EU. While confidence remains below average and significant challenges lie ahead, it is heartening to conclude a challenging year with a notable improvement in business sentiment and with the positive momentum hopefully continuing into 2021.”