Hold your horses! Finance bigwigs in the UK are starting to feel the heat from high inflation and climbing interest rates. According to a recent Deloitte survey, these money-savvy executives are becoming more wary, which means we might witness a slowdown in hiring and pay growth. Talk about a change in tune!
Deloitte’s quarterly survey revealed a jaw-dropping shift, with the gap between CFOs who were cheery about their businesses’ prospects and those who were less so standing at a whopping -10 percentage points. And here’s the kicker: just three months ago, that gap was a rosy +25. It’s safe to say the optimism bubble has burst.
Ian Stewart, the chief economist at Deloitte, lamented the situation, stating, “The springtime euphoria has fizzled out, overwhelmed by the burden of inflation and surging interest rates.” To counteract the impact, companies are tightening their belts and getting down to brass tacks by focusing on cost reduction and cash control. It’s all about battening down the hatches!
The survey also hinted at an upcoming chill in the job market. CFOs are signaling a decrease in recruitment difficulties and a slowdown in wage growth. The Bank of England has already voiced its concern about the rapid wage growth, keeping a close eye on the labor market. Rumor has it they might even raise borrowing costs for the 14th time in a row come August 3, all in the name of tackling that pesky high inflation.
Interestingly, the CFOs identified tight monetary policy as the primary threat to their businesses. It seems concerns over geopolitics and energy prices, which held the reins for the past couple of years, have taken a back seat. It’s all about the money, honey!
The survey, conducted between June 15 and June 27, interviewed a total of 69 CFOs, including representatives from 13 FTSE 100 firms and 21 FTSE 250 companies. They’ve got their fingers on the pulse of the financial landscape, that’s for sure!
Meanwhile, on a separate note, the Confederation of British Industry (CBI) dropped a bombshell on Monday. Brace yourself! They claim that if the UK seizes the opportunities presented by green growth, the economy could receive a whopping £57 billion ($75 billion) boost by 2030, accounting for 2.4% of GDP. Talk about a game-changer!
CBI’s Director-General, Rain Newton-Smith, called upon the government to step up and create a clear and stable policy environment while offering incentives for investment, among other measures. With a crucial general election on the horizon, Newton-Smith urged all parties to prioritize green growth and put it front and center in their manifestos. Time to roll up those sleeves and make it happen!
(Note: Conversion rate – $1 = £0.7625)