Biggest monthly fall in business output since first lockdown

08 February 2021

  • Services output suffered the largest fall in January, reflecting the severity of national lockdown restrictions
  • Business optimism remains muted despite by the certainty provided by the Brexit deal

The impact of national lockdown restrictions in January caused UK business output to fall at a rate not seen since April 2020, according to the latest Business Trends report from accountancy and business advisory firm BDO LLP.

The BDO Output Index, which provides the most comprehensive snapshot of business output by weighting macroeconomic data from the UK’s main business surveys, fell by 5.38 points in January to 70.44. This is a seven-month low for the Index. Having borne the brunt of the restrictions, the services sector drove the decline, with output dropping for a third consecutive month in January.

Despite this downturn, economic activity remains significantly higher than it did in April 2020, when the BDO Output Index plummeted to 44.90 points. This is largely because businesses have had time to adapt to the current restrictions, enabling many to continue providing some level of service. BDO’s Services Output Index therefore remains 24.14 points higher than it stood in April 2020 when the first nationwide lockdown took hold.

Elsewhere in the report, the BDO Optimism Index hit a six-month low as it edged downwards from 86.96 to 86.34 points in January. This comes despite the Brexit deal secured at the end of December, which provided some clarity on the UK’s future relationship with Europe. With stories since emerging of difficulties in trading with the EU, optimism may take a further knock as businesses continue to navigate checks, delays and red tape.

Commenting on the results, Kaley Crossthwaite, Partner at BDO LLP, said: “While these figures illustrate the severity of the impact that national lockdown restrictions are having on the economy, they also show the resilience of UK businesses - many of which have developed new procedures, products and services to allow them to continue trading.

“With the government expected to outline the nation’s ‘route map’ out of lockdown in the coming weeks and as the UK’s successful vaccination rollout continues, sentiment should rebound providing disruption to trade across the channel is minimized with further government support.”


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.

  January 2021 (Figures for this report) December 2020  November 2020  Janary 2020
BDO Output Index 70.44 75.82 76.02 95.88
BDO Optimism Index 86.34 86.96 86.7 95.84
BDO Inflation Index 93.66 92.2 92.5 96.07
BDO Employment Index 107.64 108.15 108.74 112.46

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 18 offices across the UK, employing 6,000 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 91,000 people working out of 1,658 offices worldwide. It has revenues of $10.3bn. 

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.