CFOs expect another year of labour and supply shortages
Firms see supply disruption continuing
Finance leaders do not expect any easing of labour shortages and supply disruptions until for at least a year, according to Deloitte’s latest UK CFO survey.
Three quarters believe there will be recruitment difficulties for a further 12 months while 59% report disruption to supplies.
CFO expectations for a rise in operating costs have reached a record high and they see inflation running higher for longer, with 54% expecting it to exceed 2.5% in two years’ time, a marked rise from 32% in Q2.
The majority (52%) expect the Bank of England’s base rate to be 0.5% or higher in a year’s time.
Despite this, finance leaders continue to focus on growth, with introducing new products or services and expanding into new markets remaining their top balance sheet priority.
CFOs are placing greater emphasis on increasing capital expenditure now than at any time in the 14-year history of the survey, with 29% rating it as a strong priority.
Ian Stewart, chief economist at Deloitte, says: “With growth slowing over the third quarter, CFOs are navigating their businesses through a more uncertain environment.
“It is encouraging that, despite expectations of persistent labour and supply shortages, they remain focused on capex and growth.
“The post-financial-crisis period was characterised by corporate caution, with cost control and cash conservation being CFOs’ primary response to economic shocks.
“Today, amid excess demand, and with the pandemic, the energy transition and Brexit driving change, corporates are focusing on investment, particularly in new technology.”