UK CFOs Wave a Smile: Optimism Grows for the Third Quarter in a Row
The latest Deloitte CFO survey shows that the big bosses of the UK’s largest firms are leaning into a brighter outlook for their businesses. It’s the third straight quarter of rising confidence, and the numbers paint a picture that feels almost stranger than the pandemic itself.
What the Numbers Say
- +17% of CFOs are now happier about their company’s financial prospects than they were just three months ago.
- Only 36% of the top execs admit to “high” or “very high” uncertainty—down from a blistering 77% back in mid‑2022.
- This uncertainty level is back to the 35% mark seen in summer 2021, right when the lockdowns were fading.
- For the first time in three years, margin expectations are on the rise for the next 12 months.
Why CFOs Are Grinning Genuinely
Ian Stewart, Deloitte’s chief economist, summed it up: “The gloom that was haunting UK businesses has largely lifted, and our sentiment now sits at levels reminiscent of those lucky growth periods in 2010, 2014, and 2021.”
Long‑standing clouds—Brexit, the pandemic, and inflation—seem to be dissipating. Rumor has it that the biggest UK companies are finally able to breathe a sigh of relief and look forward with a little optimism.
Who We Asked
- Survey conducted from 12 March to 25 March 2024.
- 64 CFOs took part, representing 8 FTSE 100 and 23 FTSE 250 firms.
- The combined market cap of the 37 companies surveyed stands at £201 bn—about 8 % of the UK quoted equity market.
Bottom Line: The Upswing is Real
While uncertainty hasn’t disappeared entirely, the trend is unmistakably upward. CFOs are not just surviving—they’re thriving on the path to better margins and steadier growth. Maybe it’s time to raise those celebratory cups of coffee!
Inflation and rate expectations on the decline
CFOs Predict a Chillier Inflation Future
It turns out the money‑wise guardrails in the UK are starting to feel a little breezier. The chief financial officers (CFOs) are rolling their eyes at yesterday’s high‑temperature forecast and now think inflation will chill down to 2.9% in a year—down from 3.5% just a quarter ago.
Looking Even Further Ahead
- In two years, CFOs foresee inflation settling around 2.3%, a nice drop from the 2.9% shown earlier.
Bank of England’s Game Plan
With the inflation storm moving away, our finance chiefs are betting on an imminent heat‑wave in monetary policy. They expect the Bank of England to turn the dial down on the base interest rate—from the current 5.25% to a cooler 4.25% over the next twelve months.
Corporate risk appetite versus defensive strategies
CFOs & The Flipping Traffic Light of Risk
A quick check of the most recent pulse shows that 20 % of CFOs now think it’s a good moment to pad their balance sheets with a bit more risk. That’s a one‑point bump from last quarter, but still pretty modest. In stark contrast, most money‑talk leaders are locking the doors on expansion and keeping the focus locked onto a very old‑school mantra: cut costs and stash cash.
Key Numbers at a Glance
- 56 % of finance chiefs marked cost cutting as a top priority.
- 43 % of them said boosting cash flow was a hard sell.
- Only 20 % feel they can afford to sprinkle a little risk on their balance sheets.
Stewart’s Take
“Risk appetite and optimism are on the rise, credit conditions are looking up, yet CFOs aren’t letting their guard down,” Stewart mused. “They’re still focused on keeping expenses low and lining their pockets with liquidity. For the time being, big‑budget projects or hunting for fresh product lines are put on the back burner. Given all the twists and turns of the recent past, it’s no wonder the caution is still here.”
Bottom Line
So, while the finance world’s got a hint of bullish vibes, it’s still playing it old‑school safe and sensible. Think of them as cautious explorers with a vault in hand rather than a fearless adventurer launching into the unknown.
Geopolitics seen as top risk to business
Rise of the Geopolitical Beast
CFOs—the numbers nerds who hold the purse strings—are still chewing on one big crop of anxiety: the geopolitical risk. The latest pulse shows a weighted score of 65, and it’s snagged the top spot for the third straight survey. Talk about a stubborn trend!
UK’s Productivity Worries: Now the New Hot Topic
Hold your breath: UK productivity is climbing the risk list. For this quarter, it’s bumped to #2 and snagged a rating of 57—the joint‑highest in a decade. Seems the UK is indeed in a tight spot, and CFOs can’t ignore it.
The Three Mother‑Earth Problems That Fell Out of the Spotlight
- Inflation – No longer the prime worry, now sitting at sixth place.
- Energy supply headaches – Dragged down to fifth.
- Labour shortages – Dropped to fourth.
At least CFOs are letting their heads down for a moment and focusing on what’s truly erupting: global politics and domestic productivity.
Concerns around geopolitical developments
Geopolitical Turmoil: CFOs Loom Over the Horizon of Cyber Threats and Energy Chaos
In the latest round of the quarterly survey, chief financial officers (CFOs) were asked to weigh in on the ways geopolitical turmoil might hurt their own businesses. The results? A front‑row seat at the looming threat of cyber‑attacks.
Key Findings
- Cyber‑attacks lead the worry list with a weighted average rating of 72 – the biggest factor that could flag off their operations.
- Economic demand shifts were second, pointing to a general slump across markets.
- Disrupted energy supplies—or higher prices—climbed next on the radar.
Forecasting the Next Three Years
When asked about where this geopolitical risk is headed, 51% of CFOs expect it to rise over the next three years, while only 3% foresee a downward swing.
Stewart’s Take
“CFOs are slightly brighter on the overall outlook and overall uncertainty is waning, but geopolitics is no different. The mighty majority are braced to see their risk stay steady or even climb higher in the next three years. Geopolitics is the one thing that feels like a roller coaster we can’t get off the ride.”
So, buckle up—if you’re in a CFO’s shoes, there’s no denying the whirlwind is still on the horizon.
