Vaccine comes as shot in the arm for bosses

Business optimism among Britain's bosses has shot up as the nation became the first in the world on Tuesday to start administering a Covid-19 vaccine to the general populace, according to a survey by the Institute of Directors (IoD).

David Sapsted

8 December 2020

However, the survey also found that directors remained wary about some prospects for the year ahead, with 30 per cent of respondents citing fears over the future shortage of skills as freedom of movement from the European Union comes to an end on December 31.In its place will be the points-based immigration system, which will apply to all skilled foreign workers wherever they live in the world - a system causing grave disquiet among companies in such fields as IT, engineering and science. Overall, however, net optimism among business leaders for the next 12 months soared from +8 per cent to +24 per cent, representing a return to levels last seen immediately before pre-pandemic lockdowns were introduced.Almost two-thirds of the 728 company directors polled said news of a vaccine improved their organisation’s prospects for 2021.But while respondents' feeling about prospects for the economy have also improved significantly, they remained firmly in the red (-31, up from -57), while investment and employment intentions were only marginally in positive territory.Tej Parikh, chief economist at the IoD, said: “At long last, business leaders have something to aim at. The arrival of a vaccine provides some light at the end of the tunnel.“The prospect of a recovery makes it all the more important to support businesses for the time being. It would be a crying shame to see viable companies collapse just as the vaccine was round the corner."Mr Parikh praised the government for introducing important measures to aid business, not least by extending the furlough scheme and reinstating insolvency protections."However," he added, "sectors that are restricted in the tier system aren’t out of the woods yet, and the grant support should be strengthened. Meanwhile, many of those that have fallen through the gaps of the furlough scheme and SEISS (Self-Employment Income Support Scheme) are in a dire situation.“The government has so far prevented the worst of potential job losses, but unemployment has still risen. Cutting National Insurance would help give directors the extra capacity to create new vacancies and drive jobs growth.“As we emerge from the twin challenges of Covid and Brexit uncertainty, we’ll need to make up for lost time on investment. This may be tricky, demand may not spring back immediately and many firms will have to deal with a debt hangover. Widening SME tax reliefs for productivity-enhancing technology would be a smart move from the Treasury.”The IoD said the results strengthened the case for supporting restricted parts of the economy through the winter, and called for larger grants for firms in supply chains where demand is curtailed by restrictions, alongside more discretionary support for those left out of previous schemes.The organisation is also recommending that the government boost support for hiring and investment to lay the foundations for a swift economic recovery, as well as providing Brexit vouchers for SMEs to access legal or specialist advice to help them adjust.