UK business in “wait and see” mode following General Election

13 January 2020

Little change in confidence follows trends seen after previous elections  
Despite uncertain outlook, output marginally increases in the short term  
Employment rate remains high, but number of vacancies drops significantly 

Business optimism across the UK has flatlined following December’s General Election as businesses wait to see the impact of the new Government and its policies, particularly regarding how the UK will leave the European Union.  

BDO’s Optimism Index, which provides the most comprehensive snapshot of business sentiment by weighting macroeconomic data from the UK’s main business surveys, remained virtually static (+0.01 points) at 95.72, lingering just above negative territory. The overall index covers optimism regarding services & manufacturing, both of which remained steady (services no change; manufacturing +0.09).

While some may have expected a more significant increase in optimism given the greater certainty, the reaction is in line with recent UK general elections. Optimism stayed flat following the four most recent elections as businesses adopted a similar “wait and see” approach. 

Despite a reluctance to commit to long-term planning, BDO’s Output Index increased by 0.43, suggesting some short-term positivity. This, however, hides the disparity between BDO’s Manufacturing Output and Services Output Indices. BDO’s Manufacturing Output index entered its 15th consecutive monthly fall, falling by 0.63 points. It was an increase in BDO’s Services Output Index, which rose by 0.57 points, that delivered the overall positive result. As fears over a no-deal Brexit subsided, service sector growth has stabilised leading the overall Output Index higher.

Commenting on the results, Peter Hemington, Partner at BDO LLP, said: “UK business is hoping for a “Boris Bounce”. However, we’ve seen in the past that post-election changes in optimism take a while to feed through, even where the result is decisive as this. Added to this, British businesses are still waiting to see the UK’s EU exit deal.”

“However, it’s difficult to find a business person who isn’t hugely relieved to see the back of last year’s political chaos.  From experience, this change of mood should feed its way through into a more upbeat approach to hiring and investing as we go through the year.”

Meanwhile BDO’s Employment Index remained flat through December, rising by only 0.03 points as a strong employment rate is balanced by lower hiring. Year on year, the number of vacancies fell by 59,000 throughout 2019, the biggest fall since the financial crisis of 2009.

Peter Hemington added: December’s Business Trends figures show the tricky economic landscape that the new Government must contend with. Their key challenge must be to find a way to kickstart growth in 2020.”

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.

  December 2019 (figures for this report) November 2019 October 2019 December 2018 (equivalent report last year)
BDO Output Index 96.47 96.04 96.69 97.2
BDO Optimism Index 95.72 95.71 95.59 100.16
BDO Inflation Index 95.27 94.84 94.25 98.76
BDO Employment Index 112.25 112.22 111.82 115.24

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.  


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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.


Tom Grant
at Headland on behalf of BDO LLP
Mob: +44 (0)78 3322 3170
Tel: +44 (0)20 3805 4841
Email: [email protected]