Money managers at Britain’s biggest companies have signalled a sharp increase in confidence in the UK economy, a closely watched survey out today shows, in a further sign the country is on course to dodge a recession.
Chief financial officers of top UK corporates notched a net positive 25 per cent confidence rating in Deloitte’s first quarter CFO survey.
That number is up from a negative 17 per cent just three months ago, when warnings of the country being on track to suffer a sharp recession abounded.
Deloitte questioned 64 CFOs, including 11 in charge of the finances of FTSE 100 companies.
A big reduction in firms’ energy bills and a moderation in strong pay growth has eased pressure on balance sheets, yanking confidence higher.
Surprisingly CFOs’ confidence rebounded sharply despite Deloitte carrying out the survey in the weeks after the financial market turmoil in March that ruined US tech lender Silicon Valley Bank and prompted a fire sale of Credit Suisse to its largest rival UBS by Swiss authorities.
In the aftermath of that episode, analysts warned of banks retreating from lending to customers in order to retain capital to withstand future bank runs, which drove the SVB and Credit Suisse failures.
CFOs only noted a slight increase in the cost of borrowing, Deloitte said.
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,” he added.
At the turn of the year, the Bank of England and Office for Budget Responsibility were forecasting the UK to suffer a recession this year. Both organisations have canned those bets.