The British Chambers of Commerce’s Quarterly Economic Survey (QES) – the UK’s largest independent survey of business sentiment and a leading indicator of UK GDP growth – found that business conditions remained historically poor in the first quarter of 2021as the third lockdown severely limited activity.
However, the bellwether survey of 6,103 firms, who employ almost a million people across the UK, revealed that business confidence has been boosted in the first three months of 2021 amid the strong vaccine roll-out and the government’s roadmap providing some ability for companies to forward plan.
Key findings:
- All the key indicators for immediate business conditions remained in negative territory and well below pre-pandemic levels in Q1
- 83% of hospitality and catering firms reported decreased domestic sales in Q1
- 55% of businesses expect turnover to grow over the next 12 months, back to pre-pandemic levels
Suren Thiru, Head of Economics at the British Chambers of Commerce (BCC), said: “Our latest survey indicates a particularly difficult first quarter of the year for the UK economy, as a third lockdown and post-Brexit border disruption weighed heavily on key indicators of activity.
“We are currently witnessing a two-speed services sector. Consumer-focused services companies, where activity is most limited by lockdown controls, suffering an especially damaging quarter. In contrast, business and professional services firms, where adapting to operate under restrictions is more straightforward, fared markedly better.
“Manufacturers had a challenging three months, with delays to supply chains caused by the ongoing disruption to post-Brexit trade weighing on the sector.
“The marked improvement in business confidence suggests that the expected first quarter contraction in output will be the nadir for the UK economy in 2021. However, the economic scarring from Covid may mean that the recovery is dramatically uneven across different sectors, locations and cohorts of people.”
Responding to the findings, Co-Executive Director of the British Chamber of Commerce, Hannah Essex, said businesses are beginning to see optimism emerge from the lowest point of the crisis. However, much remains to be done to ensure that optimism is borne out into prosperity, and many businesses still face a fight for survival in the coming months.
“The damage wrought to trading conditions by repeated lockdowns and issues at the border will not be repaired by renewed confidence alone,” she continued. “The Government must recognise the compounded impact that the combination of the pandemic and Brexit related issues have had on firms up and down the country.
“The hope for growth represented in our findings is contingent upon the Government continuing to hit its target dates for re-opening the economy, successfully rolling out the coronavirus vaccines and providing ongoing support to businesses who have suffered throughout the crisis. Particular emphasis must be placed on those sectors which face continued uncertainty about when they will be able to fully trade again.
“Businesses are desperate to play their part in the recovery from the pandemic, and the Government must provide them with the security and certainty that they need to do just that. These first quarter findings show there is a glimmer of hope that the start of rebuilding and renewal for the UK is within reach, though there is no room for inaction or overconfidence.
"Now is not the time for complacency, to translate hope into reality there must be a coherent strategy for growth which empowers businesses to lead the economic recovery from Covid-19.”
