Yahoo Finance UK economic recovery lags global benchmark
The UK’s economic recovery from COVID-19 remained behind the global benchmark in November, but news of the first effective coronavirus vaccine buoyed business confidence for the year ahead.
According to the latest Lloyds Bank UK Recovery Tracker, industries hit hardest by the virus — tourism and recreation businesses — fell furthest behind.
The tracker, working with IHS Markit, provides insights into the shape and pace of the UK’s recovery following the disruption caused by COVID-19.
News of effective coronavirus vaccines boosted confidence in firms’ 12-month outlook to heights not seen since the start of the pandemic.
The number of UK businesses linking news of an effective coronavirus vaccine to an expected rise in their output over the next year was more than five times higher than in October. This index was by far the highest recorded in the UK Recovery Tracker’s history.
READ MORE: Week ahead: Brexit endgame, FED and BOE rate meetings, UK retail sales
The improved outlook was greatest among the sectors most affected by COVID-19 lockdown measures. Almost two thirds (64%) of tourism and recreation firms and more than two fifths (43%) of real estate businesses predicted their output would rise in the next 12 months, up from 41% and 30% respectively in October.
The tracker also found that the total UK private sector output fell at a much slower pace than in Q2 2020 during November. Despite this, eight of the fourteen UK sectors monitored by the tracker were behind the global index during November, the same number as in October.
It found, unsurprisingly, that the latest lockdown measures have hit consumer facing sectors and their suppliers hardest.
They clocked a reading of 15.6 against the global benchmark for the sector of 44.0 as the national lockdown in England came into force. A reading above 50 signals output is rising, while a reading below 50 indicates output is contracting.
The beverages and food sector (39.9) also fell further behind the equivalent global benchmark (52.4) in November, with producers citing a fall in orders from pubs and restaurants.
READ MORE: Ikea faces stock shortages amid congested UK ports
Real estate (40.6) and transportation (47.5) were the only other UK sectors monitored by the tracker to register an outright decline in output during November.
Lockdown measures compounded the fall in demand for commercial property rentals and public transport, as more people worked from home.
10 out of 14 UK sectors recorded output growth in November, with the biggest month-on-month upticks seen among manufacturers of technology equipment and household goods.
While the UK overall remained behind the global benchmark in November, it still outperformed the European benchmark, with 12 of the 14 UK sectors monitored by the tracker reporting a stronger output performance.
Only tourism and recreation and beverages and food were behind the European average.
READ MORE: Chances of a Brexit deal by end of Sunday deadline is under 40%
Jeavon Lolay, head of economics and market insight for Lloyds Bank Commercial Banking, said: “While the performance of UK services businesses has been acutely affected by the tightening of restrictions and national lockdown measures, there were also positive signs of resilience for the broader economy as a range of sectors reported stronger growth in November. It shows that not only were the mandatory restrictions less onerous than in the spring but that businesses have also adapted well during the pandemic.”
Ed Thurman, managing director in global transaction banking for Lloyds Bank Commercial Banking, added: “It’s encouraging to see news of a viable vaccine boost business confidence for the next 12 months. We are nearing the end of a year that has forced firms to dig deeper than ever before and lean on the resilience and innovation they have always shown in the face of adversity.”
Watch: How to Brexit-proof your finances
