Optimism among business leaders is at a record high based on hopes that Britons will commence a multibillion-pound summer spending frenzy after being freed from lockdown.
On the day that non-essential shops and other businesses in England reopened for the first time since January, three separate studies suggest that the bounceback in the economy could be broader and faster than previously expected. Small, medium and larger FTSE companies all reported improved sentiment, with only exporters – affected by Brexit as well as coronavirus – suffering a downturn in fortunes.
Greater optimism has been spurred by expectations that consumers will unleash a spending spree in the summer. The study by the Centre for Economic and Business Research (CEBR) has predicted that savers will unlock more than a quarter of £192bn in lockdown rainy-day funds this year, adding £50bn to consumer spending. About £314m is expected to be spent in the newly reopened hospitality sector in this week alone, it said, while figures from the Post Office showed that Britons withdrew £590m in cash in March, the highest monthly figure since September.
Deloitte’s survey of bosses at some of the UK’s biggest public companies found that the potential spending boom was helping to fuel record levels of optimism among chief financial officers in charge of companies’ purse strings. Respondents said they now expected a “strong recovery in profits over the next 12 months, with profit expectations back to the previous high seen in mid-2014 at the top of the economic cycle”.
Forecasts for hiring and investment at the firms, which account for about 22% of the value of London-listed companies, are at their highest levels in nearly six years, it said. The accounting company BDO backed the assessment, saying its jobs market tracker had reached a three-month high.
Among smaller firms, the Federation of Small Businesses (FSB) said it had found the greatest level of optimism among its members since 2014.
Just over half (58%) of the 1,700 companies questioned expect their performance to improve this quarter, while 31% expect it to worsen. The FSB’s small business index has risen to +27.3 for the first quarter of 2021,