Optimism among the Chief Financial Officers (CFOs) of the UK’s largest businesses is on a rising trend. The latest Deloitte CFO survey, conducted between 12–25 March, shows sentiment among the CFOs of large UK businesses rising for the third consecutive quarter. Sentiment is well above the average since the survey started 16 years ago and at levels that preceded periods of good growth in 2010, 2014 and 2021.

The uncertainties that have clouded the business scene for much of the last eight years, driven by Brexit, domestic politics, COVID and, in recent years, inflation, seem to be clearing.  CFOs’ perceptions of external risk facing their businesses have dropped to a two-and-a-half-year low.

A period of exceptionally high inflation that has dominated CFO thinking since late 2021 seems to be drawing to an end. Concerns about inflation, supply problems, labour shortages and interest rates have dropped down CFOs’ list of worries. CFOs believe that the UK is on the verge of significant easing of monetary policy with UK rates expected to drop from a current 5.25% to 4.25% over the next 12 months.

While the latest Survey testifies to a broad-based improvement in sentiment, areas of concern remain.

CFOs see geopolitics as posing the greatest risk to their businesses over the next 12 months. This quarter’s special question asked CFOs to assess the channels through which adverse geopolitical events could damage their own businesses. By far the greatest concern was that geopolitical developments could trigger cyber-attacks. Weaker demand and higher energy prices or reduced energy supply, ranked in second and third place in the list. The overwhelming majority of CFOs expect geopolitical risk to increase or stay the same in the next three years.

The other qualification to an otherwise upbeat Survey relates to firm strategies. CFOs remain focussed on controlling costs and building up cash. For now, expansionary strategies, such as capital spending and bringing in new products or services, are on the backburner. Given the challenges of recent years it is perhaps unsurprising that, for all the good news, a degree of caution remains.

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