Britain enjoys largest surge in business optimism in a decade, but coronavirus could reverse gains

BDO’s Optimism Index, which provides the most comprehensive snapshot of business sentiment by weighting macroeconomic data from the UK’s main business surveys, rose by 5.80 points in February and now stands at 101.64 – above the 100 level which represents the historical average.

The services industry experienced the sharpest rise as businesses welcomed the ending of the Brexit stalemate following the UK’s departure from European Union.

BDO said the surge in confidence reflects the underlying improvement in business conditions as a result of a more certain political and economic outlook, particularly around Brexit, after a long period of instability.

It follows three months of marginal increases in optimism as businesses appeared to be in “wait and see” mode in the immediate aftermath of the General Election.

Historically, however, major macroeconomic shocks can knock several points off BDO’s Optimism Index, which means coronavirus could wipe out the gains made in February.

Terry Jones, Partner and Head of BDO LLP in Yorkshire, said: “We have just witnessed the most significant uplift in business optimism in 10 years, and the impact of greater political and economic certainty brought by a new majority Government should not be underestimated

Mr Jones added: “However, businesses will now be spending the coming weeks focused on mitigating the uncertainty caused by coronavirus.”

The overall jump in business confidence was driven by BDO’s Services Optimism Index, which increased by 6.52 points to 102.38.