CFOs start the new year in positive spirits, Deloitte finds
This has been attributed to the fact that inflation and rate worries that ‘dominated’ the past two CFO surveys have eased since the last quarter
CFOs of the UK’s largest firms are optimistic about prospects for their own businesses as they enter 2024, according to Deloitte’s latest CFO survey, as sentiment among finance leaders has risen for the second consecutive quarter.
According to the Big Four firm’s findings, a net 11% of CFOs are more optimistic about the financial prospects of their business than they were three months ago.
This has been attributed to the fact that inflation and rate worries that “dominated” the past two CFO surveys have eased since the last quarter. The risk of higher inflation has dropped down CFOs’ list of concerns to a weighted average rating of 53, from 58 in the last survey.
Deloitte believes this shows that the threat of persistently high inflation and the prospect of further interest rate rises has “weakened” at a consistent rate as with price pressures easing faster than expected in recent months.
Conducted between 28 November and 12 December 2023, a total of 72 CFOs participated in this quarter’s survey and included CFOs of 12 FTSE 100 and 26 FTSE 250 companies. The combined market value of the 35 UK-listed companies surveyed is £328bn, or approximately 13% of the UK quoted equity market.
Ian Stewart, chief economist at Deloitte, said: “These findings may seem at odds with recent economic news, particularly a contraction in third quarter GDP and forecasts of sluggish UK growth in 2024.
“But, while the pace of growth softened in 2023, activity proved more resilient than expected, with unemployment at low levels, corporate profitability holding up and an absence of stress in financial markets. Crucially, inflation has fallen sharply since the summer, bolstering expectations of earlier interest rate reductions.”
He added: “Whilst finance chiefs are starting 2024 in positive spirits, this is tempered by high levels of uncertainty, concerns around geopolitics, and low UK productivity. CFOs foresee growth ahead but – based on their defensive balance sheet stance – not imminently.”
