CFOs hit pause on risk as global turmoil grows
Finance leaders at some of the UK’s largest companies are bracing for economic headwinds, adopting their most defensive postures since the onset of the pandemic, according to new data from Deloitte.
The quarterly CFO Survey, closed on 31 March just ahead of the latest U.S. tariff announcements, reveals a clear shift in sentiment among UK chief financial officers.
Heightened geopolitical tensions, growing uncertainty over trade policy, and persistent cost pressures are weighing heavily on decision-making in boardrooms.
Only 12% of CFOs surveyed said now is a good time to take greater risks onto their balance sheets—less than half the long-term average of 25%.
At the same time, cost control has surged in importance: 63% of respondents named it a strong business priority, marking the second-highest reading on record.
The outlook is more cautious than pessimistic. While a net 14% of CFOs reported being more downbeat about their company’s prospects compared to three months ago, overall optimism remains well above the levels seen during the height of COVID-19 or following Russia’s invasion of Ukraine.
“Given widespread speculation over the scale and scope of US tariff rises during the survey period, it is unsurprising that CFOs reported elevated levels of uncertainty,” said Amanda Tickel, head of tax and trade policy at Deloitte UK.
“Previous periods of uncertainty over future terms of trade have resulted in a prolonged squeeze on investment.”
Tickel added that while firms are unlikely to overhaul supply chains just yet, they are actively preparing.
“Right now, businesses will be modelling the potential impacts, assessing whether their customs operations are prepared and ensuring they have as much flexibility as possible to source and supply,” she said.
Geopolitics once again topped the list of external risks for CFOs, and with more force than before. It received the highest average risk rating since early 2022, with finance leaders identifying tariffs, sanctions, and market access restrictions as the main channels through which geopolitical tensions could disrupt operations.
Nearly half (46%) of CFOs flagged this as a significant concern—up from just 15% a year ago.
Concerns over U.S. economic weakness are also rising, with the weighted risk rating climbing to 60—the highest since Deloitte began tracking the question five years ago.
The financial outlook on inflation and costs is similarly sobering. A net 63% of CFOs anticipate rising operating costs over the next 12 months, while only a net 35% expect revenue growth.
Most concerning: a net 35% foresee a fall in operating margins, suggesting that higher input costs are not being passed on to customers in full.
Inflation expectations edged up for the third straight quarter, to 3.1% over the next year and 2.6% for the year after.
CFOs also revised their forecast for the Bank of England’s base rate, expecting it to decline to 4.0% within a year—slightly below the current 4.5%.
Labour market dynamics appear to be shifting. Just 29% of finance chiefs report recruitment difficulties, down sharply from 86% three years ago.
Companies are responding with restraint: CFOs anticipate the sharpest decline in corporate hiring since Q3 2020. Wage growth expectations have also been downgraded from 3.6% to 3%.
This defensive mindset is spilling into investment decisions. A net 30% of CFOs expect capital expenditure to decline over the coming year, and a net 58% predict a reduction in discretionary spending.
Ian Stewart, chief economist at Deloitte UK, said the results reflect a rational response to macroeconomic stress.
“Although large UK businesses are preparing for turbulence, levels of pessimism have not fallen to the low that was seen during the pandemic,” he said.
“Finance leaders have a continued focus on costs and hiring, and the prioritisation of more defensive strategies is standard practice amongst business leaders during challenging times.”