Deloitte’s CFO Survey for Q2 of 2022 suggests that chief financial officers of the UK’s largest companies see an increased risk of the UK going into recession in the next 12 months. Recent increases in interest rates have tightened credit conditions, with rates expected to double to 2.5% by July 2023. The survey shows that geopolitics are seen as the greatest risk for business, with higher interest rates and inflation not far behind. On average, CFOs expect inflation to fall to around 5% by summer 2023 and to 3.4% by mid-2024 – still some way above the Bank of England’s 2% target.
Alongside concerns around a general economic downturn and the cost of doing business, perhaps unusually, two key challenges for CFOs are avoiding supply chain disruption and severe labour shortages, with 40% of CFOs reporting significant recruitment difficulties.
Ian Stewart, chief economist at Deloitte, said: ‘The Chief Financial Officers of the UK’s largest companies are braced for a recession. Finance leaders have edged towards more defensive balance sheet strategies, particularly cost control and building up cash. Yet CFOs are not in batten down the hatches mode. Risk appetite is only slightly below average levels, and well above the lows seen in the financial crisis, at the time of the EU referendum and during the pandemic.’
Richard Houston, senior partner and CEO of Deloitte, commented: ‘It’s interesting that CFOs remain optimistic on investment – despite rising inflation and recessionary risks. They remain convinced that growth and resilience will only come through increased spending on digital technology – and the skills to use it.’
Deloitte’s CFO Survey for Q2 of 2022 suggests that chief financial officers of the UK’s largest companies see an increased risk of the UK going into recession in the next 12 months. Recent increases in interest rates have tightened credit conditions, with rates expected to double to 2.5% by July 2023. The survey shows that geopolitics are seen as the greatest risk for business, with higher interest rates and inflation not far behind. On average, CFOs expect inflation to fall to around 5% by summer 2023 and to 3.4% by mid-2024 – still some way above the Bank of England’s 2% target.
Alongside concerns around a general economic downturn and the cost of doing business, perhaps unusually, two key challenges for CFOs are avoiding supply chain disruption and severe labour shortages, with 40% of CFOs reporting significant recruitment difficulties.
Ian Stewart, chief economist at Deloitte, said: ‘The Chief Financial Officers of the UK’s largest companies are braced for a recession. Finance leaders have edged towards more defensive balance sheet strategies, particularly cost control and building up cash. Yet CFOs are not in batten down the hatches mode. Risk appetite is only slightly below average levels, and well above the lows seen in the financial crisis, at the time of the EU referendum and during the pandemic.’
Richard Houston, senior partner and CEO of Deloitte, commented: ‘It’s interesting that CFOs remain optimistic on investment – despite rising inflation and recessionary risks. They remain convinced that growth and resilience will only come through increased spending on digital technology – and the skills to use it.’
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