UK finance chiefs gear up for post-pandemic spending boom
Spending by UK businesses is set to surge in the coming months as finance directors prepare for a sharp increase in hiring and investment, according to a new survey.
Almost three-quarters of chief financial officers expect rises in capital expenditure, while 76 per cent forecast increases in hiring in the year ahead.
Expectations for both are now at their highest for seven years, according to Deloitte.
The survey of top finance chiefs, carried out in June, found CFOs are now placing greater emphasis on expansion strategies, with 41 per cent rating introducing new products and services, or expanding into new markets as a strong priority.
Meanwhile 30 per cent rate expanding by acquisition and 22 per cent rate increasing capital expenditure as a strong priority over the next 12 months.
Mergers and acquisitions are set to play a particularly large role in the aftermath of the pandemic, with finance leaders placing greater emphasis on acquisitions now than at any time in the last 11 years.
Cost reduction, which has been a key priority for CFOs since the start of the pandemic, is now a lower priority than at any time in the last seven years.
The figures highlight the bullish outlook as the easing of lockdown measures and rollout of the vaccine fuel increased business confidence.
In a post-pandemic recovery featuring low interest rates, rising demand and the government’s super-deduction, an overwhelming majority of CFOs expect to increase investment in digital technology, while 83 per cent predict gains in business performance and productivity.
However, finance bosses described a challenging environment for sourcing labour as corporates respond to rising demand.
More than three-quarters reported a rise in recruitment difficulties or skills shortages over the last three months.
“With the economy reopening, CFOs’ perceptions of external uncertainty have dropped below the average of the last five years and businesses have tacked away from the defensive strategies that helped them through the downturn,” said Ian Stewart, chief economist at Deloitte.
“The pandemic, like all major shocks, will reshape the economy and we are likely to see years of normal growth compressed into just a few months.”
It comes after the latest BDO optimism index showed business confidence has surged to its highest level since records began in 2005 as bosses look ahead to the easing of lockdown restrictions later this month.