UK executives expect high inflation to squeeze profits – Deloitte

Reading Time: < 1 minute

More than seven out of 10 chief financial officers (CFOs) at Britain’s biggest companies expect high inflation to reduce their profit margins, and few see the Bank of England getting inflation under control in the next couple of years.

A quarterly survey from accountants Deloitte showed a record 98% of CFOs expect their operating costs to rise over the coming year, and 71% expect their operating margins to fall, up from 44% in the previous quarter.

“Over the next year, CFOs believe a mix of rising costs and slower growth are set to squeeze margins,” Ian Stewart, chief economist at Deloitte, said.

Last week Tesco, Britain’s biggest retailer, warned its profits would drop because of surging inflation, dragging down share prices across the grocery sector.

Consumer price inflation hit 7% in March and government budget forecasters predicted last month it would peak at nearly 9% later this year.

Despite the cost pressures, 21% of businesses plan to keep capital investment a strong priority. This is down from a record 37% in the previous quarter’s survey but is above its average over the past five years.

via Reuters

Once you're here...