Your CFO is Ready to Take More Risk, Says Deloitte

Post-election, Britain’s corporate finance chiefs have more appetite for business risk than at any time in the past four years. 

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

Deloitte chief economist Ian Stewart said: “The willingness of businesses 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.”

On top of this, business confidence among UK CFOs has risen for the fourth consecutive quarter, with 23% of finance chiefs more positive about the financial prospects for their businesses than they were in the previous quarter.

Indeed, CFOs’ expectations for corporate revenue growth have risen to their highest level in two-and-a-half years.

World moving to safer place

And the world seems to be moving to a safer place, according to CFOs.

Perceptions of external uncertainty fell to their lowest level in more than eight years, with only 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.”

Ian Stewart added: “Finance leaders have entered the second half of the year in a confident mood. This is not solely a sentiment story, as expectations for revenue growth have also risen sharply. 

“Perceptions of uncertainty have fallen in the wake of the election and against a background of low inflation and a recovering economy. With corporate risk appetite on the rise, business is gearing up for growth.”

CFOs shrug off election impact

However, nearly 70% of finance chiefs do not think that this month’s UK general election will have much impact on their own plans for capital expenditure, dealmaking or hiring staff over the next year.

American CEOs have taken a similarly phlegmatic approach to whoever is in the White House come November. Economist Philip Powell of Indiana University predicts that the US is set for a manufacturing boom regardless of whether we are facing a President Trump or a President Harris. 

And, ahead of last month’s meeting between Donald Trump and the CEOs of America’s biggest companies, including Apple, Tesla and Bank of America, Cisco Systems CEO Chuck Robbins told Fortune magazine, “The way we think about it is, if we have a Trump administration or if we have a Biden administration, regardless, there are going to be things we an align on in both.”

Asked what they think the top economic priorities for the newly elected Government should be, CFOs said that industrial strategy should be the top priority, followed by planning reform.

Houston said: “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.”

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