Finance chiefs predict boost in takeovers, survey finds

Spending by businesses is set to surge in the coming months with takeovers in the sights of UK boardrooms, according to new data.

More than half of UK finance chiefs said they have also seen a full recovery in demand for their businesses, or expect to by the end of the year, the latest Deloitte chief financial officer (CFO) survey found.

In a shift away from last year’s top priority of cost reduction at the height of the pandemic, more than three-quarters of finance chiefs now expect rises in capital expenditure.

About 76% also said they expect to see increases in hiring over the year ahead – with expectations for both recruiting and spending at their highest levels in almost seven years.

On spending, finance bosses said they are now placing greater emphasis on expansion plans, with 41% introducing new products and services, or expanding into new markets as a strong priority.

Meanwhile a takeover is a top priority for nearly one in three – the highest level for 11 years – and 22% planned increases in capital expenditure over the next 12 months will be taking precedence.

Ian Stewart, chief economist at Deloitte, said: “With the economy reopening, CFOs’ perceptions of external uncertainty have dropped below the average of the last five years and businesses have tacked away from the defensive strategies that helped them through the downturn.

“The pandemic, like all major shocks, will reshape the economy and we are likely to see years of normal growth compressed into just a few months.

“Indeed, eight in ten CFOs believe that productivity will run higher in the wake of the pandemic. That offers the hope of a more comprehensive recovery than after the global financial crisis.”

But the recovery could be difficult as pent-up demand outstrips supply, CFOs warned.

More than three-quarters reported labour shortages in the past three months, whilst nearly one-third said they expect inflation to be above 2.5% in two-years’ time – up from just 13% making the same prediction in the first three months of the year.

Richard Houston, senior partner and chief executive at Deloitte, said: “The economy continues to be shaped by the aftermath of the pandemic as well as the transition to net zero.

“We’ve seen a huge shift from the uncertainty caused by the pandemic to an appetite for acquisitions, investment and hiring.

“With the majority of finance leaders expecting a return to at least pre-pandemic levels of demand, the focus is now on innovating and creating new products and services.”