Investment and takeover boom looms as UK firms target growth – business live | Business

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With business confidence rising, UK companies are gearing up for a boom in investment and job creation, and eyeing up potential deals too.

After more than a year of cost cutting and fire-fighting the pandemic, firms are now focusing on post-lockdown investment plans, according to accountancy firm Deloitte.

Deloitte’s latest poll of financial chiefs at UK companies found they are the most aggressive about acquisitions in 11 years, as they look to expand quickly.

Over 70% of CFOs expect to boost capital expenditure and hiring over the year ahead – the highest level in almost seven years, which could help give Britain’s productivity a boost.

Richard Houston, senior partner and CEO at Deloitte, explains:

“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.”

The survey, conducted in the second half of June, found that:

• CFOs rate growth as their top priority, with expectations for an increase in hiring and investment at their highest levels in almost seven years
• Finance leaders are placing greater emphasis on acquisitions now than at any time in the last 11 years
• Over half (57%) have either reported a full recovery in demand for their businesses, or expect to do so by the end of the year, with 41% reporting that demand for their businesses has already returned to pre-pandemic levels

With interest rates at record lows, demand expected to rise, and the government’s ‘super-deduction’ tax incentive on offer, nearly 90% of CFOs expect to increase investment in digital technology. Four-fifths predicting gains in business performance and productivity.

Firms are now focusing on ‘expansionary strategies’, with more than three-quarters reporting a rise in recruitment difficulties or skills shortages over the last three months.

Covid-19 was still the top concern, followed by inflation and climate change, with Brexit dropping down the list.

Ian Stewart, chief economist at Deloitte, says the relaxation of lockdown is allowing firms to focus on the recovery.

“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.”

A separate survey from accountancy and business advisory firm BDO has found that firms were their most optimistic since 2005 in June, with manufacturers benefitting from “an improved global economic outlook, as the effects of the vaccine rollout begin to be felt by economies across the globe”.

And the latest Accenture / Markit UK Business Outlook shows that hiring intentions among businesses has improved to a record high, with firms also boosting their capital expenditure and R&D plans:

We’ll be tracking all the developments through the day….

The agenda

• 8.30am BST: Sweden central bank’s monetary policy meeting minutes
• 1pm BST: India industrial production for May
• 4pm BST: US consumer inflation expectations for June