Business confidence in May hit its highest point since June 2014, driven by the rollout of the vaccine programme and further easing of lockdown restrictions.
The BDO Optimism Index, which quizzes businesses to calculate optimism, jumped from 99.85 in April to 109.71 the following month, above the long-term average of 100.
May’s optimism marked the highest point since June 2014, when Europe began to emerge from the Eurozone crisis and before Brexit-related uncertainty took hold.
It also marks the fourth consecutive month of growth for the index.
The index was driven particularly by optimism in the services index, which increased 10.70 points to reach 110.56 in May.
The services index includes restaurants, cinemas and the wider hospitality industry, which benefitted the most from the latest relaxation of restrictions.
BDO partner Kaley Crossthwaite said: “The latest figures show that most businesses, buoyed by the success of the vaccine rollout and the further easing of restrictions, have confidence the UK will continue along the government’s roadmap out of lockdown, despite growing concerns over the Delta strain of the virus.”
According to the government’s roadmap, June 21 should see the final lifting of coronavirus restrictions.
However medical experts have suggested the date should be rolled back by a few weeks, so more people can be double-vaccinated and therefore enjoy maximum protections from the more transmissible Indian variant.
Despite the overall optimism, BDO’s inflation index reached a near four-year high in May, suggesting price pressures are mounting in the UK economy and are likely to have a tangible impact on everyday consumers.
BDO said this had been caused by a combination of a resurgence in demand as restrictions are lifted, as well as supply-side disruptions associated with the pandemic and Brexit.
Crossthwaite added: “While this is a much-needed dose of positive news as we head into the summer, rising inflation serves as a sobering reminder of the challenges that remain on the horizon.”