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As business confidence grows, UK businesses are bracing for a boom in investment and job creation, and are also considering potential deals.
After more than a year of cutting costs and fighting the pandemic, companies are now focusing on post-containment investment plans, according to accounting firm Deloitte.
Deloitte’s latest poll of UK company CFOs found they are the most aggressive about acquisitions in 11 years, because they seek to develop quickly.
More than 70% of CFOs expect to increase their capital spent and hiring over the coming 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 huge shift from the uncertainty caused by the pandemic to an appetite for acquisitions, investments and hiring. With the majority of financial executives expecting a return to at least pre-pandemic demand levels, the focus is now on innovation and the creation of new products and services.
“The companies that have successfully weathered this pandemic have been able to adapt quickly. Investing in digital technologies will be the key to business agility and creating sustainable growth.
The investigation, carried out in the second half of June, revealed that:
- CFOs rank growth as their top priority, with expectations for increased hires and investments to their highest levels in nearly seven years
- CFOs put more emphasis on acquisitions now than at any time in the past 11 years
- More than half (57%) either reported a complete recovery in demand for their businesses or plan to do so by the end of the year, with 41% saying demand for their businesses has already returned to levels before the pandemic.
With interest rates at record highs, rising demand and the government’s proposed “super-deduction” tax incentive, nearly 90% of CFOs plan to increase their investments in digital technology. Four-fifths predict improvements in company performance and productivity.
Companies are now focusing on “expansion strategies,” with more than three-quarters reporting an increase in recruiting difficulties or skills shortages in the past three months.
Covid-19 was still the main concern, followed by inflation and climate change, with Brexit falling to the bottom of the list.
Ian Stewart, chief economist at Deloitte, says easing the lockdown allows businesses to focus on the recovery.
“As the economy reopens, CFOs’ perceptions of external uncertainty have fallen below the average for the past five years and companies have moved away from defensive strategies that have helped them weather the recession.
“The pandemic, like all major shocks, will reshape the economy and we will likely see years of normal growth compressed into just a few months. In fact, eight in ten CFOs believe that productivity will increase as a result of the pandemic. This offers hope for a more comprehensive recovery than after the global financial crisis. “
A separate survey from the accounting and consulting firm BDO found companies to be the most optimistic since 2005 in June, with manufacturers benefiting “from an improving global economic outlook as the effects of the vaccine roll out begin to be felt in economies around the world.”
And the last Accenture / Markit UK Business Outlook shows that companies’ hiring intentions have improved to an all-time high, with companies also increasing their capital spending and R&D plans:
We will be following all developments throughout the day ….
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