UK firms expanding hiring, spending plans

Amid surging confidence as lockdown restrictions come to an end, major British companies are pushing ahead with ambitious investment, acquisition and hiring plans, according to a new survey.

David Sapsted

13 July 2021

Accountancy firm Deloitte's survey of more than a hundred chief financial officers found that hiring and investment plans were expected to increase at their fastest pace in seven years, while acquisition expectations were at an 11-year high.Richard Houston, senior partner and CEO at Deloitte, said: “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.“The businesses that have successfully navigated this pandemic have been able to adapt quickly. Investing in digital technologies will be key to business agility and creating sustainable growth.”More than three-quarters of CFOs reported increasing problems with recruitment and skills shortages over the past three months, but 80 per cent said they were expecting productivity to increase in the post-pandemic era.While the effect of the Covid-19 pandemic remained the primary concern, CFOs reported they were now much less worried about the effects of Brexit and more concerned about inflation and climate change.Ian Stewart, chief economist at Deloitte, said: "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.”Deloitte found that 71 per cent of CFOs expected their companies to increase capital expenditure in the coming year, not least because the government has introduced a two-year tax break for corporate investment.More than half of respondents said demand for their firms' business had either fully recovered to pre-pandemic levels, or was expected to by the end of the year.The Deloitte survey came on the heels of one from accountancy and business advisory firm BDO, which found that UK company leaders were at their most optimistic for 16 years, with manufacturers benefiting from “an improved global economic outlook, as the effects of the vaccine rollout begin to be felt by economies across the globe”.Additionally, the latest Accenture/Markit 'UK Business Outlook' found that hiring intentions were now at a record high, with firms also boosting their capital expenditure and R&D programmes.