LONDON (Reuters) – British business confidence recorded its biggest monthly improvement in more than four years this month, reflecting optimism that COVID-19 vaccines will lead to economic recovery in 2021, a Lloyds Bank survey showed on Monday.
Lloyds said its monthly business barometer rose by 17 percentage points to -4% in December, its highest since March, before the coronavirus pandemic hit Britain’s economy.
“The news of the vaccine progress has bolstered this month’s confidence figures, more than offsetting uncertainties around the UK’s new trading relationship with the EU,” Lloyds economist Hann-Ju Ho said.
The improved business sentiment mirrors a similar gains among households whose confidence rose this month by the largest margin in eight years, according to a survey last week from market researchers GfK.
The immediate economic backdrop is weak. Britain’s economy is on course to shrink 11% this year, the most since 1709, according to the Bank of England, while growth in early 2021 looks set to be hampered by ongoing COVID-19 restrictions.
Lloyds said 32% of firms it surveyed expected to cut staff next year, and 22% planned to increase numbers. Larger businesses tended to be more upbeat, and also more likely to plan to end pay freezes.
The survey was based on a poll of 1,200 firms conducted between Nov. 25 and Dec. 10.
(Reporting by David Milliken; Editing by William Schomberg)