Covid-19 leads to unprecedented monthly decline in business sentiment

14 April 2020

  • Optimism Index sits at its lowest ever point since BDO began tracking 
  • Employment Index contracts for the first time since 2012 
  • Unemployment rate anticipated to rise from 3.9% to more than 6% next month


Business optimism across the UK fell by its largest ever margin in March, according to figures from the latest BDO Business Trends report. The scale and speed of the decline is unprecedented for a single month over the past 15 years and is similar in magnitude to the cumulative falls throughout 2008.

BDO’s Optimism Index, which provides the most comprehensive snapshot of business sentiment by weighting macroeconomic data from the UK’s main business surveys, fell by 21.69 points in March to 79.95.

The fall came as governments around the world reacted to the Coronavirus outbreak by placing economies into lockdown at large scale. This follows a strong rise in optimism in February, as the political and economic uncertainty of 2019 began to subside enabling the UK economy to find its feet.

Resilience in the employment market also saw a sharp decline with BDO’s Employment Index falling by 26.89 points to 85.97. The drop, the first since November 2012, has put an end to the steady growth in the UK job market which has been seen since the financial crash.

Notwithstanding government provisions for furloughing staff, which many companies have taken up, there has been a rise of 950,000 claims for universal credit in the final two weeks of March. The rise suggests that the unemployment rate could be ready to increase from 3.9% in the three months to January, to more than 6% as soon as next month.

Commenting on the results, Kaley Crossthwaite, Partner at BDO LLP, said: “Covid-19 represents a significant threat on many fronts. It is only in the coming weeks and months, as the immediate public health threat passes, that the true scale of the economic impact will be clear, but these early indicators suggest it will be widespread and severe.

“The speed of the decline across all indices reveals how the economic crash caused by Covid-19 is different to the 2008 financial crisis when the fall was spread across multiple months. Businesses have had to act nimbly to make decisions in an unclear timeframe about how to adapt and survive a severe economic shock.

To download BDO’s Business Trends New Economy report and find out more, visit 


Overview of the BDO indices:

An overview of all four indices is provided in the table below, detailing figures for the last three months and the same month of the previous year, to allow for comparison. 100 = average value. Above 95 = positive.


March 2020 (figures for this report)



January 2020


March 2019  

BDO Output Index





BDO Optimism Index





BDO Inflation Index





BDO Employment Index






Note to editors

Accountancy and business advisory firm BDO LLP provides integrated advice and solutions to help businesses navigate a changing world. 

Our clients are Britain’s economic engine – ambitious, entrepreneurially-spirited and high-growth businesses that fuel the economy.  

We share our clients’ ambitions and their entrepreneurial mind-set. We have the right combination of global reach, integrity and expertise to help them succeed.  


BDO LLP operates in 17 locations across the UK, employing nearly 5,500 people offering tax, audit and assurance, and a range of advisory services. BDO LLP is the UK member firm of the BDO international network.

BDO’s global network
The BDO global network provides business advisory services in 167 countries, with 88,000 people working out of 1,800 offices worldwide. It has revenues of $9.6bn.  

Methodological notes

The BDO Monthly Business Trends Indices are prepared on behalf of BDO LLP by the Centre for Economics and Business Research ltd., a leading independent economics consultancy. Cebr has particular strengths in all forms of macroeconomic and market forecasting for the UK and European economies and in the use of business survey techniques.

The indices are calculated by taking a weighted average of the results of the UK’s main business surveys. It incorporates the results of the quarterly CBI Industrial Trends Survey (and the CBI Monthly Trends Enquiry which is carried out in the intervening months); the Bank of England Agents’ summary of business conditions; and the Markit/CIPS Manufacturing and Services PMI data.

Taken together the surveys cover over 4,000 different respondents from companies employing approximately five million employees. The respondents cover a range of different industries and a range of different business functions. Together they make up the most representative measure of business trends available.

The surveys are weighted together by a three-stage process. First, the results of each individual survey are correlated against the relevant economic cycles for manufacturing and services. This determines the extent of the correlations between each set of survey results and the relevant timing relationships. Then the surveys are weighted together based on their scaling, on the extent of these correlations and the timing of their relationships with the relevant reference cycles. 

Finally, the weighted total is scaled into an index with 100 as the mean, the average of the past two cyclical peaks as 110 and the average of the past two cyclical troughs as 90.

The results can not only be used as indicators of turning points in the economy but also, because of their method of construction, be seen as leading indicators of the rates of inflation and growth.