Good morning and welcome to our continued coverage of the world economy, financial markets, the eurozone and business.
With the rise in business confidence, UK companies are preparing for a boom in investment and job creation, and are also looking for potential deals.
After more than a year of cost reduction and firefighting from the pandemic, companies are now focusing on post-closure investment plans, according to accounting firm Deloitte.
Deloitte’s latest survey of UK corporate finance chiefs found that they are the most aggressive about acquisitions in 11 years as they seek to expand rapidly.
More than 70% of CFOs expect to drive capital spending Y hiring over the next year, the highest level in nearly seven years, which could help boost Britain’s productivity.
Richard Houston, Senior Partner and CEO of Deloitte, explains:
“We have seen a big shift from the uncertainty caused by the pandemic to an appetite for acquisitions, investments and hiring. With most financial leaders expecting a return to at least pre-pandemic demand levels, the focus is now on innovating and creating new products and services.
“Companies that have successfully weathered this pandemic have been able to adapt quickly. Investing in digital technologies will be key to business agility and creating sustainable growth. “
The survey, conducted in the second half of June, found that:
- CFOs view growth as their top priority, with hiring and investment expected to increase at their highest levels in nearly seven years.
- Finance leaders are placing a greater emphasis on acquisitions now than at any time in the last 11 years.
- More than half (57%) have reported a full recovery in demand for their businesses or expect to do so by the end of the year, and 41% report that demand for their businesses has already returned to pre-pandemic levels.
With interest rates at historic lows, demand is expected to increase, and the government ‘super deduction’ Tax incentive on offer, nearly 90% of CFOs expect to increase investment in digital technology. Four-fifths predict gains in business performance and productivity.
Companies are now focusing on “expansionary strategies,” with more than three-quarters reporting an increase in hiring difficulties or skills shortages in the past three months.
Covid-19 remained the main concern, followed by inflation and climate change, with Brexit falling down the list.
Ian Stewart, chief economist at Deloittesays the loosening of the lockdown is allowing companies to focus on recovery.
“With the economy reopening, CFOs’ perceptions of external uncertainty have fallen below the average for the past five years and companies have moved away from the defensive strategies that helped them weather the recession.
“The pandemic, like all major crises, will reshape the economy and we are likely to see years of normal growth compressed into a few months. In fact, eight out of ten CFOs believe productivity will rise in the wake of the pandemic. That offers hope for a more complete recovery than after the global financial crisis. “
A separate survey of the accounting and business advisory firm BDO has found that companies were more optimistic since 2005 in June, and manufacturers benefited from “an improved global economic outlook as the effects of the vaccine launch begin to be felt in economies around the world.”
And the last Accenture / Markit UK Business Outlook shows that recruitment intentions among companies have improved to a record level, and companies have also boosted their investment and R&D plans:
We will follow all the developments throughout the day …
- 8.30am BST: Minutes of the monetary policy meeting of the central bank of Sweden
- 1pm BST: India Industrial Production for May
- 4pm BST: US Consumer Inflation Expectations for June
George is Digismak’s reported cum editor with 13 years of experience in Journalism