Business confidence of CFOs rises post-election

Sentiment among CFOs rose for the fourth consecutive quarter, with a net 23% of finance leaders in the second quarter of 2024 more positive about the financial prospects of their business than they were in the previous quarter.

The survey of 61 CFOs asked whether they are now more or less optimistic about the financial prospects for their firms than they were three months ago (or if their optimism remains unchanged). The net balance (net 23%) was then computed by subtracting the percentage of CFOs less optimistic from the percentage more optimistic.

CFOs’ expectations for UK corporate revenues increased to their highest level in two-and-a-half years in July, with a net 64% of finance leaders who participated expecting UK corporates’ revenues to increase over the next 12 months – up from net 42% recorded in the previous quarter. 

Ian Stewart, chief economist at Deloitte, said: “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. A more predictable business environment has boosted the spirits of the corporate sector, and shows that the worries around Brexit, Covid-19, inflation and politics that have weighed on corporate spirit for much of the last eight years are clearing.”

Corporate risk appetite saw its biggest increase in more than four years in this quarter’s survey, with 36% of finance chiefs reporting that now is a good time to take greater risk onto their balance sheets, according to Deloitte. 

Additionally, perceptions of external uncertainty fell to the lowest level in more than eight years, with 23% of finance leaders rating the level of external financial and economic uncertainty facing their business as ‘high’ or ‘very high’. 

Richard Houston, senior partner and chief executive of Deloitte UK, said: “We’ve seen a significant shift in risk appetite post the general election and the new government’s focus on growth and stability is already increasing corporate confidence.

“Business leaders want industrial strategy to be top of the new government’s economic priorities, and there’s a clear desire to work in partnership to unlock growth and drive productivity. This will be critical to delivering an inclusive and sustainable future for the UK.”

Deloitte surveys CFOs and group finance directors of major companies in the UK quarterly. The 2024 second quarter survey was carried out between 9th-19th July, and 61 CFOs participated, including the CFOs of 31 FTSE 350 companies. The rest of the participants were CFOs of other UK listed companies, large private companies and UK subsidiaries of major companies listed overseas.