Business sentiment surveys are holding at or around long-run averages for the respective data series. Recent rebounds have further improved some of the indices in response to the ending of lockdown, combined with a vaccine rollout programme. Expectations of improved business conditions in 2021 are high, with most sectors forecasting better sales and revenue outcomes this year. Still, everything is relative, and “better” sales and revenue compared with 2020 are certainly more likely for many firms, given the substantial disruption to a range of economic sectors.

Confidence and sentiment do not always translate to hard economic data. Although there have been improvements here, there is some way to go before a recovery can be declared. The second wave of the pandemic in the UK, and its accompanying lockdowns, interrupted the improving economic activity across the final months of 2020. The UK’s GDP yearly growth rate was -7.3% at Q4 2020, which is marginally higher than the Q3 rate of change but still negative over the yearly period.

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