CFOs predict recovery not till summer 2021

CFOs are not expecting a ‘return to normal’ to pre-pandemic levels for business until next summer at the earliest, although most are expecting to take back the bulk of furloughed staff in the meantime, according to research by Deloitte

The results show almost two-thirds (62%) of CFOs do not expect demand for their own businesses to recover to pre-pandemic levels until after Q2 2021, up from just under half (49%) in Q2’s survey.

The firm’s Q3 2020 survey polled 102 CFOs, including CFOs of 21 FTSE 100 and 37 FTSE 250 companies. The combined market value of the UK-listed companies that participated is £417bn, approximately 20% of the UK quoted equity market.

Perceptions of external uncertainty remain elevated and well above levels seen before the pandemic, with the majority of CFOs surveyed (79%) feeling there is a high or very high level of uncertainty facing their business, in line with Q2 (80%).

Over three-quarters of finance leaders (78%) expect UK corporates to reduce capital expenditure in the next 12 months, maintaining the sentiment seen in Q2, where the majority (86%) anticipated a decrease.

Despite this, the majority of CFOs surveyed expect to keep the vast majority of furloughed employees on their payrolls. On average, they expect to retain 82% of their furloughed staff after the scheme ends in October.

The pandemic has meant businesses have made greater investment in some areas, like technology, while reducing it in others.

 A net balance of 64% of CFOs say they expect to reduce their land, business buildings and workspace infrastructure investments, while 65% say they expect to increase investment in organisation and business process improvements, such as restructuring, streamlining and automation, over the year ahead.

Ian Stewart, chief economist at Deloitte, said: ‘Business leaders expect a longer haul back to pre-Covid levels of activity.

‘With further restrictions coming into effect, businesses have scaled back expectations and are focussed on strengthening their businesses and their balance sheets.

’British businesses are gearing up for a long winter with Covid-19, with a full recovery on the horizon only after next summer.’


CFOs expect the negative effects of the COVID-19 pandemic to overshadow those of Brexit. Three quarters (75%) of CFOs expect the pandemic to have ‘significant’ or ‘severe’ negative effects on their businesses over the next 12 months. By contrast, 23% expect similar negative effects due to Brexit.

Finance leaders report that they will decrease hiring and capital expenditure more prominently over the next year if a Brexit ‘no-deal’ occurs. Around a third (30%) of CFOs said they would reduce hiring in the event of a no-deal, compared to 15% in a thin-deal scenario, which would ensure tariff-free goods trade only.

A quarter (26%) of CFOs said they would decrease capital expenditure in a no-deal scenario, compared to 11% in the event of a thin-deal.

Over the next 12 months, CFOs continue to rank defensive balance sheet strategies highly with 57% and 48% respectively rating reducing costs and increasing cash flow as strong priorities.

Richard Houston, senior partner and chief executive of Deloitte UK, said: ‘While expansionary strategies remain on the back burner, it’s encouraging to see that staff retention is still a priority for business leaders.

‘Facing a combination of Covid-19 and Brexit, businesses need to find ways to adapt and transform. Investment in technology, innovation and skills will be a critical factor in their recovery from this crisis.’

Further reading:

Deloitte CFO survey data

Pat Sweet |Reporter, Accountancy Daily [2010-2021]

Pat Sweet was the former online reporter at Accountancy Daily and contributor to the monthly Accountancy magazine, pub...

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