Finance directors go cautiously

into 2016

A majority of UK businesses are predicting growth across 2016, a study of the country’s leading finance directors and chief financial officers has found – though predictions were cooler than in previous years.

The FD Recruit 2016 Forecast quizzed hundreds of finance directors across a range of industries about confidence in the economy, job security and likely spending habits for the next 12 months.

But while around 80% headed into 2015 with an outlook that was either ‘optimistic’ or ‘very optimistic’, that proportion a year later has fallen to 67%, with a greater number leaning more towards cautious optimism.

A major contributing factor to these findings is the 31% of respondents who revealed the last 12 months hadn’t lived up to their predictions.

Uncertainty over the EU affecting trading conditions and further, harsher government cuts impacting the overall economy were two of the main causes behind tempered sales and growth.

However, the study did find reason for optimism in 2016, with only a minority of companies reporting that they intended to cut budgets over the year ahead. Seven in ten companies intend to increase spending in at least one area.

Budgets for recruitment and staff should see the biggest increase (for 55% of companies), followed by property, offices and buildings (44%).

Spending on IT and telecomms, as well as marketing, are set to remain the same, where budgets for equipment and machinery are likely to see an overall decrease (or remain at zero) for as many as 48% of firms.

Phil Scott, director of FD Recruit and founder of the annual study, said: “There is mixed news in this year’s study, but overall the tone is positive – just with a note of caution.

“Many FDs reported growth in 2015 and this will continue through 2016. A majority of FDs are planning to increase their budgets. However, there is a lot of uncertainty in the political arena and this is causing firms to bolster their short term plans and hold back on longer-term projects for now.”

Phil Scott concluded: “Overall, the findings are good news for FDs, as well as their suppliers. And perhaps cautious optimism is a more sensible approach than wild speculation.”