CFOs more optimistic at growth prospects

  • Business Advice
A group of people sat around a flip chart looking at graphs
Peninsula Logo

Peninsula Group, HR and Health & Safety Experts

(Last updated )

Business confidence has bounced back among finance leaders since the start of the year, with many considering artificial intelligence as the driving force for investment and productivity

Around 25% of CFOs reported being more optimistic about the financial prospects of their business than they were in January, according to the latest Deloitte CFO quarterly survey.

Going forward, CFOs cited increasing cash flow (48%), reducing costs (43%) and lower borrowing costs (24%) as their top priorities. However, they expect cuts to overall capital expenditure, hiring and discretionary spending over the next year.

Only 39% ranked economic uncertainty as a substantial risk to their business – down from 71% in Q4 2022.

Brexit, high energy prices and disrupted energy supplies posed significantly less risk to businesses than they did in Q4 2022, eased as a result of the Windsor Framework, announced in February.

In addition, falling energy prices reduced risk levels as wholesale gas prices decreased by almost 70% since CFOs were last surveyed.

However, two thirds were concerned about rising geopolitical risks worldwide, including the war in Ukraine.

This was followed by persistent labour shortages (56%) and the prospect of further interest rate rises and the tightening of monetary conditions in the UK and US (58%).

Ian Stewart, chief economist at Deloitte, said: ‘The economic unpredictability that marked the beginning of 2023 has started to clear, with CFOs reporting the largest decline in perceptions of uncertainty to date.

‘Business confidence has rebounded, helped by a decrease in energy prices, an easing of Brexit concerns and an improving inflation backdrop.

‘Crucially, finance leaders report little change in credit conditions, suggesting that March’s events in the global banking system have not affected the pricing and availability of credit for UK corporates. Despite a brighter outlook, CFOs are alive to the continued risks facing the economy. Corporates remain in defensive mode and CFO risk appetite is subdued.’

CFOs reported some easing in recruitment difficulties and expected inflation rates to fall to 4.2% within a year, although they do not expect a return to the 2% level for several years.

Meanwhile, the majority of CFOs (75%) surveyed expect to see a significant growth in capital spending on artificial intelligence over the next five years.

Around 67% also believe the adoption and application of artificial intelligence will help raise UK productivity – although some believe it has the potential to reduce jobs overall.

Stewart added: ‘The CFOs foresee artificial intelligence helping to drive UK productivity, an outcome that could provide a lasting boost to business growth. They are divided, however, on how AI will affect the number of jobs in the economy, highlighting the need to ensure the gains from new technologies are widely shared.’

This is the 63rd quarterly survey of CFOs, conducted between 21 March and 3 April 2023. It involved a total of 64 CFOs, including the CFOs of 11 FTSE 100 and 24 FTSE 250 companies – with a combined market value of the 38 UK-listed companies surveyed is £253bn.

If you have questions on how to support employees who are affected by the conflict in Ukraine, visit BrAInbox today where you can find answers to questions like How can I support employees affected by events in Ukraine?

Read more from the latest BrAInbox Business News update:

Government rethinks Retained EU Law Bill following lack of support

Dentist worker loses £36k furlough case

450 directors banned for Covid fraud

SMEs owed £68k on average by suppliers

Related articles

  • polling station

    Blog

    What could a general election mean for employment law?

    Here's what the big three have each vowed to do should they come away with an election win.

    Peninsula TeamPeninsula Team
    • Employment Law
  • NIC

    Blog

    Conservatives plan NICs abolition for self employed

    After a difficult week, PM Rishi Sunak has set out a raft of tax measures at the Conservative manifesto launch with plans to abolish main NICs rate for four million self employed workers

    Peninsula TeamPeninsula Team
    • Employment Law
  • Global survey results

    Blog

    UK Lagging in Mental Health Conversations: A Wake-Up Call for Employers

    The UK is diverging from this global trend, with a 4% decrease in employees speaking out about mental health issues.

    Peninsula Team Peninsula Team
    • Business Advice
Back to resource hub

Try Brainbox for free today

When AI meets 40 years of Peninsula expertise... you get instant, expert answers to your HR and Health & Safety questions

Sign up to our newsletter

Get the latest news & tips that matter most to your business in our monthly newsletter.