CFOs predict post-Covid home working shift

CFOs at some of the UK’s biggest companies are predicting a five-fold increase in home working by 2025, along with hikes in the levels of corporate and individual taxation as a result of the pandemic

Deloitte’s latest CFO survey took place in December before the announcement of a new national lockdown and the final Brexit deal, and polled 90 finance leaders including the CFOs of 12 FTSE 100 and 44 FTSE 250 companies.

Despite the uncertainties, the findings showed optimism rising to a 12-year high, although half of CFOs do not expect demand for their own businesses to recover to pre-pandemic levels until the last quarter of 2021 or later.

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

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

Risk appetite remains weak with only 19% believing it is a good time to take greater risk onto the balance sheet, although this is up from just 3% in Q1 2020.

More than three quarters (78%) of finance leaders expect Covid-19 restrictions on movement and activity to continue through the first half of 2021, while 57% expect these measures to be removed permanently in Q3 2021.

CFOs believe that the pandemic is set to trigger a fundamental change in the business environment, with 98% expecting flexible and home working to increase.

Similarly, 98% of CFOs expect levels of corporate and individual taxation to rise, two thirds (62%) anticipate higher regulation of the corporate sector and 59% see the size and role of government in the economy increasing.

Ian Stewart, chief economist at Deloitte, said: ‘The announcement of a deal after the survey closed is likely to have offered an end-year boost to CFO sentiment.

‘The survey shows that in the first half of December, CFOs expected restrictions on movement and activity needed to combat Covid-19 to continue for the first half of this year. The announcement of further restrictions after the survey will clearly add to such concerns.

‘Business leaders believe the pandemic will permanently change the business landscape. CFOs anticipate a five-fold increase in homeworking relative to pre-pandemic levels by 2025 and believe that the state will be both larger and more active in the long term.’

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