Deloitte’s latest quarterly survey of UK chief financial officers (CFOs) suggests there has been an “unprecedented” rise in business confidence following December’s election. Collecting responses from 119 UK CFOs between 13 December and 6 January, the accounting giant found that 53 per cent of finance chiefs were more optimistic about the financial prospects of their companies than three months earlier, the highest level in the survey’s 11-year history. This compares with just 9 per cent expressing the same opinion in the third quarter of 2019.
The jump in CFOs’ spirits comes as Boris Johnson’s emphatic victory ended the prolonged parliamentary deadlock and provided somewhat greater clarity over the UK’s impending departure from the EU. “The fog of uncertainty that has lingered over the UK since the 2016 EU referendum is lifting,” says Ian Stewart, chief economist at Deloitte. He describes these sentiment levels as “unimaginable at any time in the last three years”. Whereas Brexit had topped the list of CFOs’ concerns since the referendum, it has dropped to third behind fears of weak demand in the UK and global geopolitical risks.
Together with perceptions of a less gloomy global picture, just over a third of CFOs now rate the level of external financial and economic uncertainty as ‘high’ or ‘very high’, down significantly from 62 per cent in the third quarter. The feeling of reduced uncertainty has triggered a rebound in expectations for investment this year – 39 per cent of CFOs expect an increase in capital expenditure while 27 per cent anticipate an uptick in hiring.
