UK’s Business Confidence Rises Into Positive Territory in Q1 2021

British businesses are feeling optimism about conditions improving in 2021, with an end to lockdowns and restrictions and a rebound in sales due to pent-up demand. According to the ICAEW, UK’s business confidence index has surged into positive territory, rising from -19 in Q4 2020 to +10 in Q1 2021.

Even though firms are optimistic about a rebound, overall economic conditions are expected to be weaker at the beginning of the year due to the third round of lockdowns. As a result, during the first three months of the year, businesses anticipate more job cuts and reduced output on account of a decline in sales.

The decline in sales owing to the lockdowns have driven the steepest reduction in employment seen in at least 10 years, with over 50% of UK businesses operating with a smaller workforce. Even though business confidence has rebounded into positive territory at the beginning of the year, the level of rebound was more muted than the one seen at the end of the 2008-09 financial crisis, when it had surged as high as 25.3.

Chief executive at ICAEW, Michael Izza, remarks, “Rising confidence among businesses is an encouraging sign of things to come and a predicted growth in employment is good news for people who have lost their jobs over the past year. As we look towards spring and summer, we want to see the chancellor use the upcoming budget to provide a bridge to sustainable and resilient economic recovery, getting people back to work, helping exporters, and investing in digital technology to make our businesses competitive in the 21st century economy.”

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Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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