This morning it was announced that the rapid rollout of Covid-19 vaccines has led to business confidence hitting its highest levels in three years.
According to IHS Markit’s global business outlook survey, business confidence now stands at +32 per cent, up from +26 per cent in October.
The increase has been driven by the success of the vaccine rollout, especially in the UK, which has left firms more confident that restrictions will soon be lifted.
To get a feel for how things are playing out on the ground and to assess the impact of the recent roadmap announcement, City A.M. spoke to a number of business owners around London and across the UK.
Roadmap and vaccines: ‘Ready to party again’
Despite a drop in consumer-facing industries driving a contraction of 3.5 per cent in the services sector throughout January, Mark Green, who runs tailored DJ service DJ Mark Green, looks at the future with renewed confidence.
“Since the recent roadmap announcement, wedding enquiries and bookings have gone through the roof,” shared an ecstatic Green with City A.M. “Client confidence has returned with a bang and there’s now a frantic race on to secure future dates.
“If the key lockdown easing dates are achieved in April, May and June, the future is looking far brighter for my business and the wedding and broader events industry,” he added.
The story is not any different over at event organiser Cariad Personal Ceremonies, as Ali Fleming, one of the agency’s celebrants, said “couples are ready to party again.”
“Having lost the vast majority of wedding bookings in 2020, there is now a huge flurry of enquiries hitting my inbox,” Fleming told City A.M.
“There’s a renewed vigour among people booking events.“
For Middlesex-based marketing agency Agency Squared, the future is also looking much more upbeat than six months ago. Founder Andy Bargery sees the demand for his services slowly return.
“I certainly see an improvement in confidence among the businesses I work with. I am optimistic that, with the vaccination rate soaring and decreasing occurrences of Covid-19, the economy will see a rapid return to growth in the second half of the year,” Bargery said.
‘Tired and run down’
Despite the increased business confidence, UK’s GDP did drop by 2.9 per cent in January as a fresh national lockdown took hold of the UK economy, the ONS said late last week.
The January figure was 9 per cent below its February 2020 level and largely driven by a decline of 3.5 per cent in services. Therefore, for some business owners, recovery still feels like a long way off.
To Christine Charitonos, founder of London-based creative agency What Does Not, GDP data and the government’s views on the economy “are irrelevant to people and businesses in the trenches.”
“We cannot overlook the fact that the foreseeable future will be an uphill battle for many people and companies,” Charitonos said over the weekend.
“So many businesses have collapsed before our eyes and so many sectors have been completely overlooked, the creative industry being just one example,” she added.
Meanwhile, Helen Llewellyn, founder of workplace wellbeing specialists Infinity Wellbeing, recognised that observation as she said in agreement that she is not very optimistic about this year.
“When chatting to other people and businesses, they seem tired, run down and with little appetite for growth” Llewellyn told City A.M.
“My feeling is we’ll have a very difficult 2021 before the economy bounces back next year.”
Post-pandemic spending boost
During the first quarter of this year, Britain’s economy is likely to shrink four per cent due to lockdown disruptions and post-Brexit trade rules, the Bank of England said last month.
Nancy Shafee, an artist at Flights of Fantasy, is not surprised by the BoE outlook as she is convinced that is it going to take a long time for things to pick up for small independent retail businesses.
“Very few craft events have been able to go ahead over the past year, so it has been difficult to communicate with customers. I know there is a belief that people will want to spend money and ‘treat’ themselves, but many won’t feel they can take the risk,” she said.
However, that is not how Jez Lamb, founder of craft beer marketplace Beers @ No.42, experiences the current situation.
“Sure, a lot of people are struggling right now but there’s also a feeling of ‘things are tough, so I’m going to treat myself more’ and some businesses, including my own, are lucky enough to benefit from that,” Lamb said.
Then there’s also the fact that a lot of people cannot spend as they want to right now due to the lockdown and that’s holding the economy back, he pointed out.
Lamb’s view is backed up by a recent study that suggested that higher-earning Brits will help boost UK GDP this year by spending £16bn of the nation’s £160bn pot of excess savings, built up over the pandemic, once lockdown eases.
Earlier this month, economists at Deutsche Bank revised upwards their estimates of the total pool of excess savings across bank accounts in the UK to a whopping £160bn.
“When the rest of the retail sector opens up, that will hopefully be a good thing for everyone,” Lamb added.
Economy ‘in a limbo’
There has been a lot more positive sentiment since the vaccine rollout began, and particularly since the government announced tis roadmap, at the end of last month, but for Keisha Shah, founder of the Milton Keynes-based educational resources provider Teddo Play it is “simply too early to tell if we’re out of the woods yet.”
“The financial bleeding caused by Covid-19 hasn’t stopped and many people are still anxious about their jobs and livelihood. For a full recovery, we need more money coming into the country, more people in jobs and more incentives for people to spend,” Shah told City A.M.
“We may also need to accept the fact that we will have to live with the effects of Covid-19 for many years to come,” she sighed.
To Bryony Lewis, founder of online gift shop T & Belle, it feels like the economy is in “a limbo” right now.
“As more businesses are able to re-open, I hope we will see a return to spending, but it is natural that people will spend more cautiously,” Lewis said.
She thinks it is inevitable that there will be more job losses as the furlough scheme starts to be withdrawn later this year.
“With unemployment already at such a high level, there will be plenty of belt tightening going on. And this is all assuming that the vaccine roll-out works and the levels of virus transmission continue to fall once restrictions are lifted,” Lewis concluded.