Despite the challenges of 2020, business confidence has returned to positive territory as news of the vaccine roll-out increases hopes of recovery in 2021, according to the latest ICAEW Business Confidence Monitor (BCM).
The monitor, which is based on 1,000 telephone interviews among ICAEW chartered accountants between 19 October 2020 and 15 January 2021, revealed that although output is weak overall, confidence rebounded in the second half of October and has held up since then.
The institute stated that worries over infection rates have been balanced by “positive news” about vaccine approvals and distribution.
ICAEW has predicted that companies should expect to see “strong recoveries” in sales in 2021, especially in the domestic market, leading to higher employment levels, some recovery in profits, and “modest” increases in investment.
However, the recoveries will only “partially offset” the 2020 declines with sales in 2021 are likely to remain well below pre-pandemic levels.
Companies are reportedly experiencing “high levels” of inventories and “significant spare capacity”, with many also facing problems with late payments, the ability to expand into new areas, and transport.
The BCM also revealed that confidence that economic conditions in the year ahead will be better than over the past 12 months is now more “widespread” than at any point since before the Brexit referendum.