The May DMP survey was conducted between 7 and 21 May and received 3,206 responses.
In May, businesses’ near-term expectations for the impact of Covid-19 were little changed on the month. Businesses estimated that their sales in 2021 Q2 would be 10% lower than they otherwise would have been because of Covid-19, with employment 6% lower and investment 11% lower.
Near-term sales expectations remained stable in May at -4% for 2021 Q3, with the impact of Covid-19 on sales expected to ease to -2% in 2021 Q4. Longer-term expectations for 2022 and beyond improved with firms expecting sales to be around 1% higher than in the absence of Covid-19, up from -1% in April.
The estimated impact of Covid-19 on employment remained largely unchanged in the near term. Businesses’ expectations of the impact of Covid-19 on employment in 2021 Q2 fell to -6% from -5% in April. Expectations for 2021 Q3 remained stable at -4%, with these easing to -3% in 2021 Q4. Longer-term expectations for 2022 and beyond were slightly higher at -1%, compared with -2% in the April survey.
The percentage of employees on full-time furlough (still employed but not required to work any hours) fell to 6% in May, from 9% in April. The percentage of workers on premises was expected to rise to 64% in June and 73% in 2021 Q3, the highest level since the beginning of the pandemic.
The impact of Covid-19 was expected to lower investment by -11% in 2021 Q2 and -5% in 2021 Q3 down from -9% and -4% respectively in April. That drag on investment was expected to ease slightly to -3% in 2021 Q4. Longer-term expectations for 2022 and beyond remained positive, with firms expecting investment to be around 1% higher than in the absence of Covid-19.
Businesses estimated that the effect of the UK’s decision to leave the EU on their investment was -5.5% in 2020, but this effect is expected to ease to -3.2% in 2021 and -2.3% and 2022. Businesses also estimated that the UK’s decision to leave the EU would increase average unit costs by 2.5% in 2021 relative to 2020, and that those costs increases would persist into 2022.
Overall uncertainty continued to fall in May. The percentage of businesses that viewed the overall level of uncertainty facing their business as high or very high fell to 50% in May, the lowest level since February 2020. Covid-19 remained the largest source of uncertainty for 32% of businesses, down from 34% in April. The share of firms reporting Covid-19 in the top 3 sources of uncertainty rose to 74%, up from 70% in the previous month. The share of firms who reported Brexit in their top three sources of uncertainty remained stable at 34% in May, 12 percentage points lower than in December 2020.
The DMP was set up in August 2016 by the Bank of England together with academics from Stanford University and the University of Nottingham. It was designed to be representative of the population of UK businesses. All results are weighted. See Bloom et al (2017) for more details.
The DMP receives funding from the Economic and Social Research Council.