Geopolitics remains biggest business risk for UK CFOs, Deloitte finds

Corporate confidence edged lower in Q3 amid ongoing concerns over geopolitical uncertainty, following a “strong bounce” in optimism after this summer’s election, according to Deloitte’s latest survey of UK CFOs.It found that positive sentiment has fallen among CFOs, with a net 6% feeling more optimistic about the financial prospects of their businesses, against the net 23% reported three months ago. This is still above the long run average of net -1%.

According to Deloitte, UK CFOs also reported a “modest” increase in uncertainty, with 31% rating the level of external financial and economic uncertainty facing their business as high or very high, compared to 23% the last quarter.

Ian Stewart, chief economist at Deloitte, said: “Corporate sentiment has edged down but is running at above average levels. Geopolitical uncertainty is the biggest worry and we are seeing rising levels of concern about the possibility of a hard landing in the US.”

For the last five quarters, CFOs have told Deloitte that geopolitical developments represent the greatest external risk to their businesses, with a weighted average rating of 70. Low productivity in the UK is in joint second place at 53, alongside “sharply rising” concern about a potential hard landing in the US.

However, CFO concerns over geopolitics seem to be decoupling from worries about energy prices, with higher energy prices and a disruption in energy supply ranking as the seventh biggest risk to business. 

Stewart added: “Unlike the period following the invasion of Ukraine in 2022 – when CFOs’ worries about energy supply and prices spiked in tandem with geopolitical concerns – finance leaders today are relatively sanguine about the risks around energy, in part, perhaps because of the decline in the oil price between July and late September.”