The results of Deloitte’s latest survey of UK CFOs – conducted in the last two weeks of March – make for sobering reading.
Optimism about the financial prospects of their businesses was down sharply from the previous quarter, with respondents more than four times less positive than in the final three months of 2025 as a result of concerns around energy prices, inflation and interest rates in the wake of the conflict in the Middle East.
“Finance leaders are coping with high levels of external uncertainty and their focus is on managing risks from geopolitics in terms of rising energy prices and higher financing costs,” says Ian Stewart, Chief Economist at Deloitte UK.
When asked how these factors have affected her business, the head of treasury and working capital at a multinational consumer healthcare company suggested that in international treasury, the work to mitigate liquidity risk needs to start years before turmoil happens. In other words, when the world turns upside down, it is too late to react.
“Our markets are set up with optimal capital structure, overdraft facilities, centralised hedging/global pooling wherever possible and intercompany funding and depositing facilities,” she explains.
The company has overlaid its risk management approach with a multi-year working capital project which started in 2025. “We mainly focus on mitigation of supply chain risk – diversifying supply chains, better planning and process efficiency for all three areas of working capital (receivables, inventory and payables),” she adds.
Reducing costs and increasing cash flow remain the top priority for UK CFOs who have reacted to increased risk with a shift to more defensive financial strategies, while expectations for capital spending and hiring have flagged.
The UK-based treasurer agreed with the respondents to the Deloitte survey who referred to cost control and building up cash as the top priorities in the current business environment but observed that geopolitical developments, rising energy prices and speculation around interest rate rises had not made it more difficult for her company to access the funding it needs.
“We are high investment grade so the answer is no,” she says. “However, I believe that for sub-investment grade or highly leveraged private equity firms, it is very difficult to navigate the current environment.”
Just over two-thirds of CFOs ranked cost control as their main priority – up from half in the previous quarter – while 43% said they were focused on cash control. Just under half expected UK corporates to reduce capital expenditure, with 72% expecting a fall in discretionary spending and 79% anticipating a fall in hiring.
According to Stewart, the focus on reducing costs is greater than at just about any time over the last decade and a half.
“Rarely in the last 16 years have UK CFOs been more focused on cost control,” he says. “This challenging environment is prompting them to scale back expectations for margins. The immediate priority for finance leaders is to strengthen balance sheets in the face of external headwinds.”
