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Businesses are less fearful of the omicron variant and more positive about a growing supply chain resilience that has increased business confidence in January according to the latest Business Trends report from accountancy and business advisory firm BDO LLP.
The BDO Output Index jumped by 7.84 points to a seven-month high of 117.52 following an increase in consumer activity as fears regarding the new variant subsided. The figures for January mark a turnaround from December, when concerns over the new variant helped drag the Output Index down by 3.31 points.
Businesses also appear confident that the long-term threat of coronavirus is decreasing. BDO’s Optimism Index increased to 104.91 in January, its highest value since July 2021, and 1.10 points above December’s cautious outlook. The index now sits well above the 95 level that marks positive trend growth.
The BDO Manufacturing Output and Optimism indices witnessed a marked improvement, rising by 2.83 and 2.96 points respectively. This has been driven by an initial easing of supply-side issues, as well as an improved outlook for coronavirus.
An uptick in output and outlook also pushed BDO’s Employment Index to its highest point since the onset of the pandemic in March 2020. The index rose 0.9 points in January to 109.98.
Kaley Crossthwaite, partner at BDO LLP, said alleviating restrictions and reduced fears around omicron have provided a helping hand to businesses at the start of the year.
“It’s reassuring to see the continued growth in employment mirroring the economic recovery and supply chain problems beginning to subside,” she said.
“However, businesses aren’t yet out of the woods. Supply side disruption is expected to continue into 2022 and, when combined with increasing inflationary pressures and rising consumer prices, could place a strain on the outlook for the months ahead.”