The latest Deloitte survey of UK Chief Financial Officers shows a sharp rise in corporate confidence following the UK general election. For the full survey visit:

https://www.deloitte.co.uk/cfosurvey

The second quarter survey opened five days after the election, on 9 July, and closed on 19 July. Business confidence has increased for the fourth consecutive quarter and is at the highest level since the start of 2023. This is not solely a sentiment story. CFO expectations for their own firm revenues rose to their highest level in two and a half years in July and are running at twice the long-run average.

The worries around Brexit, COVID-19, inflation, and politics that have weighed on corporate spirits for much of the last eight years seem to be clearing. CFOs’ perceptions of external uncertainty fell to the lowest level in more than eight years in July. The proportion of CFOs who rate financial and economic uncertainty as being ‘high or very high’ is one-third, the lowest since the last peak seen in October 2022 following the mini-budget.

A more predictable business environment seems to have boosted the spirits of the corporate sector. Corporate risk appetite saw its biggest rise in more than four years in July and 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. CFOs say they are putting less weight on cost control and building up cash and rather greater weight on introducing new products.  

Along with reduced uncertainty and an improved outlook for revenues CFOs also report an improvement in credit conditions. CFOs rate credit as being more available than at any time in the last two years. Better credit conditions and strengthening demand seem, in turn, to lie behind a sharp rise in the balance of CFOs expecting to increase their own borrowing over the next 12 months.

CFOs have entered the second half of the year in a confident mood. Uncertainty has fallen away and revenue prospects have brightened. CFOs have become more willing to take risks onto their balance sheets. The UK corporate sector is gearing up for growth.