U.K. business leaders were the most optimistic on record last quarter as the country set out its plan to exit Covid restrictions and Brexit risks receded.
The upswing in confidence helped push expectations for hiring and business investment to their highest levels in almost six years, according to a survey of chief financial officers by Deloitte. Respondents said they anticipate a strong recovery in profits over the next year.
The brighter outlook reflects the easing of lockdown curbs amid a mass vaccination program and hopes that disruptions caused by Britain leaving the European Union will dissipate this year. Companies that sought to minimize new spending on staff and equipment last year are now moving away from defensive strategies, the poll found.
“We are seeing a turbo-charged surge in business optimism,” said Ian Stewart, chief economist at Deloitte. “Pent-up business and consumer demand are set to power a strong profits recovery, one already anticipated by the surge in equity markets since February.”
The survey also found:
Concern about inflation and asset price bubbles increased sharplyThe number of CFOs describing external financial and economic uncertainty as high or very high fell to 46%, from 71% in the previous quarterTwo thirds think the bulk of their employees will return to the office by the third quarterBrexit, which has been first or second on the list of CFO worries since the 2016 referendum, dropped to seventh last quarter after Britain and the EU completed their divorce on Dec. 31Close to 10% said they has experienced significant or severe disruption due to the Brexit
The survey of 100 CFOs, whose firms represent 22% of the U.K.’s quoted equity market, was conducted from March 17 to March 30. That followed the March 3 budget, when Chancellor of the Exchequer Rishi Sunak extended coronavirus support programs, and the government’s February announcement of its roadmap out of lockdown.
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