Following the success of the vaccination rollout, continued government support and the relaxation of lockdown rules, the Close Brothers Asset Finance Business Sentiment Index (BSI) has improved sharply as positivity floods back into the markets.
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The latest figures, taken from our regular Business Barometer survey of 900 senior SME leaders, was conducted in mid-April.
For the UK overall, the BSI is at levels last seen towards the back end of 2018 and 2019, and has more than doubled in the months since December 2020 when the survey was conducted just as the second lockdown came into effect.
This improvement was replicated across the board – all sectors surveyed saw a marked upward adjustment, including services, which had a torrid time during the pandemic.
The BSI is calculated and based on business owners’:
- Appetite for investment in their business in the coming 12 months
- Access to finance and whether they’ve missed a business opportunity due to a lack of available finance
- Views about the UK’s economic outlook
- Thoughts on their likely performance in the coming 12 months
Appetite for investment
Already strong, firms’ willingness to invest remained solid, with particularly encouraging results in the construction sector, where investment sentiment increased five-fold.
Once again, over a third (35%) of companies surveyed have missed a business opportunity due to a lack of available finance despite the availability of CBILS (Coronavirus Business Interruption Loan Scheme) and Bounce Back loans.
Unfortunately, firms’ appetite for investment wasn’t matched by the their ability to get funding – in the construction sector this was particularly acute with half of firms missing opportunities because of a lack of available finance.
Many lenders remain reluctant to accept new business because of provisions that need to be made for bad debt, making them less willing to be exposed to the risk of non-payment.
Positivity about the economic outlook for the UK increased by a scarcely believable seven-fold between the second lockdown and the relaxation of social distancing measures.
With so many unknowns now out of the way – from Brexit to vaccinations - business owners are more comfortable with where the UK economy is headed and how it likely to recover in 2021.
Predicted business performance
What a difference a few months make – statistically, business owners are nine times more positive about their firm’s predicted performance in the coming 12 months than they were in December.
Far more firms expect to expand in 2021 than was the case a year ago when there was significantly more uncertainty about the future.