CFOs of the UK’s largest firms are more optimistic about prospects for their own business following the election, according to Deloitte’s latest CFO survey. Sentiment has risen for the fourth consecutive quarter, with a net 23% of finance leaders more positive about the financial prospects of their businesses than they were in the previous edition.
Commenting on this, Deloitte UK senior partner and chief executive, Richard Houston, said: “We’ve seen a significant shift in risk appetite post the general election and the new government’s focus on growth and stability is already increasing corporate confidence.
“Business leaders want industrial strategy to be top of the new government’s economic priorities, and there’s a clear desire to work in partnership to unlock growth and drive productivity. This will be critical to delivering an inclusive and sustainable future for the UK.”
Corporate risk appetite on the rise
Corporate risk appetite saw its biggest rise in more than four years in this quarter’s survey, with 36% of finance chiefs reporting that now is a good time to take greater risk onto their balance sheets. Perceptions of external uncertainty fell to the lowest level in more than eight years, with only 23% of finance leaders rating the level of external financial and economic uncertainty facing their business as ‘high’ or ‘very high’.
Deloitte UK chief economist, Ian Stewart, said: “Finance leaders have entered the second half of the year in a confident mood. This is not solely a sentiment story, as expectations for revenue growth have also risen sharply.
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By GlobalData“Perceptions of uncertainty have fallen in the wake of the election and against a background of low inflation and a recovering economy. With corporate risk appetite on the rise, business is gearing up for growth.”
Improving outlook for corporate revenues
CFOs’ expectations for corporate revenues rose to their highest level in two-and-a-half years in July and are running at twice the long-run average. A net 64% of finance leaders now expect UK corporates’ revenues to increase over the next 12 months, a significant jump from the net 42% seen last quarter.
Stewart added: “The willingness of business to take risk onto their balance sheet is at the highest level since the UK was recovering from the pandemic-induced recession in the spring of 2021. A more predictable business environment has boosted the spirits of the corporate sector, and shows that the worries around Brexit, COVID-19, inflation and politics that have weighed on corporate spirit for much of the last eight years are clearing.”
