Business hopes soar before Freedom Day but China slowdown calls durability of recoveries into doubt

Tue 13 Jul 2021
Posted by: William Barns-Graham
Trade News

economic recovery

UK firms are reporting their highest optimism levels since 2005 due to the improved global economic outlook driven by the Covid-19 vaccine rollout.

With just a few days until ‘Freedom Day’ on 19 July, business optimism increased for the fifth consecutive month, according to accounting firm BDO’s Business Trends report.

Upward direction

Manufacturing, services and employment indices are all moving in an upward direction, BDO reports

“Businesses are clearly looking forward to the lifting of restrictions on the 19 July. After a gruelling year of unpredictable change, the ending of restrictions is timely, although rising Covid-19 cases still leave an element of uncertainty,” said Kaley Crossthwaite, partner at BDO.

Increased activity

BDO’s findings support other surveys reported in the Guardian yesterday (12 July), including an Accenture and IHS Markit UK report that found two-thirds of UK private sector firms expect an increase in business activity over the coming year.

Just 9% predicted a fall – the highest business expectations reading in six years.

Shoppers delight

Retail sales are also growing at their highest rate since records began, according to data from the British Retail Consortium and KPMG reported in the FT. This is due to the Euro 2020 feel-good factor and pent-up demand following lockdown.

Between April and June, retail sales were up 10.4% compared with the same period in 2019. June saw an increase in retail sales of 13%.

China warning

ONS figures for May showed a slight slowdown in productivity following the sharp rise April, with only a 0.8% increase, which was less than economists expected, reports the FT.

The UK is not alone in this respect.

China reported a 27.1% year-on-year growth for exports and imports in the first half of 2021 following 13 consecutive months of growth, reports Global Times.

However, its General Administration of Customs has warned that the second half of 2021 could present a “real challenge”. 

Aljazeera reports that the “softening” of China’s rebound is a warning to other economies about the durability of their recoveries from the pandemic.