Northern Society of Chartered Accountants

Business confidence at record high in quarterly index 25 May 2021

Business confidence has hit its highest level since a survey of chartered accountants began in 2004.

• Business confidence surges to all-time high, ICAEW survey finds.
• Vaccine success and declining infection rate likely to account for positive reading.
• Record domestic sales expected from consumer-led recovery.

Sentiment tracked by ICAEW’s Business Confidence Monitor (BCM), found optimism at 38.5 on the quarterly index, its highest level since the survey was launched 17 years ago and second highest since 2014.

The record reading for Q2 2021 signals that a large majority of companies surveyed expect economic conditions to improve over the next 12 months, with record domestic sales forecast. [1]

The continued success of the vaccine rollout programme in the UK and sharp decline in Covid infection rates is likely to explain why businesses are so confident for the year ahead, ICAEW said.The lifting of Covid restrictions, together with accumulated household savings from a year of lockdowns, make a sharp rise in consumer spending likely for the rest of 2021.

Business confidence had returned to positive territory in Q1 and the record levels this quarter reflect rising optimism about large parts of the economy reopening. The findings from the BCM come after figures from the Office for National Statistics showed the UK economy had contracted by 1.5% in the first three months of 2021, but gathered speed in March as lockdown restrictions were eased.

Michael Izza, ICAEW Chief Executive, said:

business confidence has hit a record high

“Business confidence has hit a record high as companies look forward to the economy reopening. This increased optimism is not surprising given the success of the vaccine rollout, decline in Covid rates and the extension into the autumn of key government support schemes, such as furlough. 

“Companies now expect exceptional levels of domestic sales, as well as rising profits and increasing investment. They are thinking about hiring staff.  Much of this depends on consumer confidence also lifting and households being ready and willing to spend.

companies will be mindful of wider health and economic problems around the world

“The past year has been a terrible struggle for businesses and confidence was at an all-time low in early 2020. We hope this strong bounce back in confidence will in turn deliver a year of strong growth, and the BCM is the clearest indicator yet that the rest of 2021 could see a historically strong economic rebound from the unprecedented lows of the past year.

“However, even as commercial life in this country unlocks, companies will be mindful of wider health and economic problems around the world which could yet dampen or even threaten the recovery for UK businesses. 

“The UK economy is also closely intertwined with other parts of the world and slower vaccination rates elsewhere could have an effect on our own economic recovery. For example, the shutting of production shifts in our automotive industry because of supply chain problems and subdued economic growth in the rest of the world show how much our economic recovery is reliant on the health of the rest of the world.”

Find out more at icaew.com

Find out more about the ICAEW Business Confidence Monitor national report

About Northern Society of Chartered Accountants

Northern Society of Chartered Accountants (NorSCA) represents 4,000 ICAEW members and ACA students working in business and the finance profession across the North East of England, Teesside, northern Yorkshire and Cumbria.

We have been assisting businesses in the north of England and producing chartered accountants for over 130 years.

About ICAEW

There are over 1.8m chartered accountants and students around the world – talented, ethical and committed professionals who use their expertise to ensure we have a successful and sustainable future.

Over 181,500 of these are ICAEW Chartered Accountants and students, a powerful and diverse network of talented people, whose initiative and integrity help economies thrive. We train, develop and support each one of them so that they have the knowledge and values to help build local and global economies that are sustainable, accountable and fair.

We’ve been at the heart of the accountancy profession since we were founded in 1880 to ensure trust in business. We speak for the profession, uphold standards and campaign for progress in a volatile world. We work with others to develop strong, accountable and open economies where people can trust data, leaders can make good decisions, public finances are transparent and businesses are accountable.

ICAEW (Institute of Chartered Accountants in England and Wales) is a founder member of Chartered Accountants Worldwide and the Global Accounting Alliance.