Friday 8 January 2021 8:00 am

Top finance bosses expect home working and taxes to increase following Covid-19

Top chief financial officers expect flexible and home working to increase post-pandemic – with a five-fold increase in home working expected by 2025, according to a survey by Deloitte.

More than three-quarters (78%) of top CFOs expected Covid-19 restrictions on movement and activity to continue through the first half of 2021, but more than half (57%) thought the measures would be removed permanently in Q3 later this year. 

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The CFOs said the pandemic would trigger fundamental change in the business environment, with flexible and home working likely to continue and become more popular. 

In tandem, the business leaders said corporate and individual taxation was likely to rise, with nearly two-thirds (62%) of CFOs anticipating higher regulation of the corporate sector and 59 per cent saying the role of government in the economy will increase. 

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Richard Houston, senior partner and chief executive of Deloitte UK, said: “The pandemic has triggered fundamental and lasting changes in business, with CFOs expecting rising levels of home-working, greater diversification of supply chains and increasing investment in technology.

“CFOs are optimistic about operating in this changing world, with a return to growth expected this year. However, with pandemic restrictions expected to be in place through the first half of this year and elevated uncertainty CFOs are maintaining defensive balance sheet positioning.” 

Cautiously optimistic 

The CFOs quizzed by Deloitte expected a return to growth in 2021, although half did not expect demand for their own businesses to recover to pre-pandemic levels until the last quarter of 2021 or later. 

There was a sharp improvement in CFO expectations for UK corporates’ revenues this quarter with 71 per cent expecting a rise over the next 12 months, up from 29 per cent in Q3 2020, while over half (53%) of CFOs expected operating costs to rise. 

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For the first time since 2015, a net balance of CFOs are expecting corporate operating margins to increase in the next year.

But CFOs remain in defensive mode with 49 per cent and 46 per cent respectively rating increasing cash flow and reducing costs as strong priorities. 

Meanwhile expansionary strategies have risen in popularity slightly since Q3, for example, around a quarter (28%) cited introducing new products, services or expanding into new markets as a priority for the year ahead.