Deloitte's CFO Survey | UK CFOs gear up for growth following the election

• Corporate risk appetite among UK CFOs has seen its biggest rise in more than four years, following the general election;
• CFO perceptions of external uncertainty have fallen to the lowest level in more than eight years;
• Business confidence among finance leaders has risen for the fourth consecutive quarter; 
• CFOs’ expectations for corporate revenue growth have risen to their highest level in two-and-a-half years;
• Finance chiefs suggest that the new government should prioritise industrial policy and planning reform to boost UK growth and productivity.

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%¹ of finance leaders more positive about the financial prospects of their businesses than they were in the previous edition.  

Richard Houston, senior partner and chief executive of Deloitte UK, 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’. 

Ian Stewart, chief economist, 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. 

“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 average². 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. 

Ian 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.”

Defensive strategy and risk 

Reducing cost and increasing cashflow remain the top two priorities for finance leaders over the next 12 months, with CFOs rating each at 51% and 35% respectively. The percentage of respondents who rated these as a strong priority has dropped from the previous quarter (56% and 43% respectively), with the focus on increasing cashflow at its lowest level in almost two years and below the average since the question was first asked³.

Along with reduced uncertainty and an improved outlook for revenues, finance leaders have also reported an improvement in credit conditions. They rated credit as being more available than at any time in the last two years, with a net 42% of the panel reporting that it is easily available.  

Meanwhile, geopolitics remains the top risk⁴ to business for CFOs, as it has been for much of the last two-and-a-half years. This quarter’s reading is its joint highest rating since Q1 2022, when the conflict in Ukraine began, with a weighted average of 70⁵.

Priorities for the new government 

This quarter’s survey included two special questions on the topic of the 2024 general election. Firstly, finance chiefs were asked about the impact of the election on their own plans for capital expenditure, deal-making or hiring over the next year. The balance of opinion among the CFOs was tilted towards the election having a mildly positive effect (21%), with the majority (69%) believing the election would have little or no impact on their plans.

CFOs were also asked what they think the top economic priorities for the newly elected government should be. Industrial strategy emerged as the top priority, with a weighted average rating of 75⁶ followed by planning reform (73).

ENDS

Note to editors       

¹ A number of the Deloitte CFO survey findings are presented in terms of net balances – standard practice with surveys conducted by many central banks. In the case of the CFO optimism figures, CFOs were asked whether they are now more or less optimistic about the financial prospects for their firms than they were three months ago (or if their optimism remains unchanged). The net balance (net 23%) was then computed by subtracting the percentage of CFOs less optimistic from the percentage more optimistic. Net balances can also be negative. In the case of CFO optimism, a negative reading would imply a greater proportion of CFOs are less rather than more optimistic about their firm’s prospects. Throughout this press release and the survey report net percentages indicate where net balances are used to present findings.  

² The long run average for expectations for corporate revenues is a net 32%. 

³ Average of reducing cashflow for the series is 39%, with the statistic starting in 2010.

⁴ The 12 risk areas tracked in the survey are:   

• Rising geopolitical risks worldwide including forthcoming elections  
• Poor productivity/weak competitiveness in the UK economy  
• Higher energy prices or disruption to energy supplies  - Persistent labour shortages  
• The risk of higher inflation and/or a bubble in housing and other real and financial assets   
• The prospect of further rate rises and a general tightening of monetary conditions in the UK and US  
• Long-term effects of climate change   
• Economic weakness and/or volatility in US growth  
• Medium-term supply chain disruption   
• Deflation and economic weakness in the euro area, and the possibility of a renewed euro crisis   
• Effects of Brexit/deterioration in UK-EU relations  
• Weakness and/or volatility in emerging markets      

⁵ Weighted average ratings on a scale of 0-100 where 0 stands for no risk and 100 stands for the highest possible risk.

⁶ Weighted average ratings on a scale of 0-100 where 0 stands for not a priority and 100 stands for the highest priority when asked which policies the incoming government should prioritise to boost growth and productivity in the UK.

About the survey       

This is the 68th quarterly survey of Chief Financial Officers and Group Finance Directors of major companies in the UK. The 2024 second quarter survey took place between 9 July and 19 July. 61 CFOs participated, including the CFOs of 31 FTSE 350 companies. The rest were CFOs of other UK-listed companies, large private companies and UK subsidiaries of major companies listed overseas.   

The Deloitte CFO Survey is the only survey of major corporate users of capital that gauges attitudes to valuations, risk and financing.      

For the full report and copies of previous CFO surveys, please see here.