46. CFO survey reveals the economy is in buoyant mood - with Ian Stewart

46. CFO survey reveals the economy is in buoyant mood - with Ian Stewart, Deloitte

Hannah Munro: 0:48 

Hello everybody and welcome to this episode of CFO 4.0. I'm very excited to have Ian Stewart from Deloitte joining us again to talk to us about the latest CFO survey. So, welcome Ian, fantastic to have you back on the show. 

Ian Stewart: 1:04 

Oh, thanks very much for inviting me back actually. Yeah so, looking forward to the conversation Hannah. 

Hannah Munro: 1:10 

Yeah, so, you recently released your latest CFO survey. Before we dial into necessarily sort of the results of what you've seen, do you want to just tell us a little bit about this survey? How many CFOs you were speaking to? What were the participants like and where they come from? Just to give some context. 

Ian Stewart: 1:29 

Yeah, so, we were talking to about 100 CFOs. I mean, these are large companies, so, they are mainly FTSE 350 companies. companies or their unquoted equivalents. So, they might be family businesses, private equity owned, or the subsidiaries of big overseas businesses. So, we are going out to survey the UK's biggest companies. And to put this in some sort of context, I mean, the companies we survey generally account for about 20% of the entire equity market by market cap. So, these are These are not a huge number of companies, but they are very important for the economy because the decisions the CFOs make have a disproportionate effect on corporate spending, on hiring, on wages, and on the overall direction of the economy. So, as the chief economist at Deloitte, I mean, I decided 12 years ago when I set up this survey, we really ought to understand what CFOs were thinking, which is why I set up the survey. And it's pretty broad-based. It's across all sectors. So, there's no particular bias within sectors. So, I'd say this is like getting a gathering of 100 of the most important CFOs in the country in a room and then asking them a whole load of difficult questions. 

Hannah Munro: 3:00 

So, in terms of timing, because obviously you guys do this survey every quarter. When did you start the survey? And how recent is the data that you're looking. 

Ian Stewart: 3:12 

at? Yeah, it's very, very recent, actually. It's the... early part of July and the very end of June. So, you know, it's a period which coincides with this very big rise in COVID cases, the Delta wave. And it closed before we started to see case rates coming down. So, I mean, obviously, for the last year, this survey has been dominated, as everything has, financial, economic, by the pandemic. But we were particularly interested to be running this at a time when you were seeing a third wave, an unexpected rise in case rates, albeit with the prospect of the reopening of the economy on the 19th of July. So, it's, you know, I'd say, you know, one of the things we do with this survey is we try to When we finish, we finish very quickly. We publish very quickly because the data need to be off the moment because, of course, things are changing so, quickly. 

Hannah Munro: 4:18 

Was there anything different about this particular survey, you know, just to put the results into context? Obviously, apart from the opening up and the increased wave, was there anything else around the situation or maybe the type of survey that you did that differs from other ones? 

Ian Stewart: 4:39 

Well, so, what we did do is, and actually this is going to be something that we're going to build on, is that we have included questions on climate change. Now, I mean, this is... This is very unusual for us because we ask CFOs about things that are very relevant to the decisions, they're making day-to-day about expenditure, risk appetite, how they finance the business. And we definitely avoid questions, wide-ranging questions, which you might argue are not really the province of the CFO. What we felt increasingly, though, is that climate change and the consequences for big companies has become a board level and very much a CFO issue. So, we want to reflect that in this survey. So, we included that and we're going to do more questions on climate. I think the other thing for me was that this is taking the temperature of the UK economy off the biggest downturn in history in the middle of the year. And You know, this has been a year in which activities come in much stronger than expected. Sentiments improved a lot. You see it in the equity market. So, for me, this is a very kind of important survey to see whether, you know, looking at the companies which really will determine the direction of the corporate sector in the UK whether we are right to think about this being a kind of V-shaped recovery one which is you're going to see a real snapback in activity which takes us back to where we were before the pandemic you know perhaps in a matter of less than six months so, You know, this survey gets quite a lot of coverage in the media, Bank of England and Treasury follow it very, very closely. And I think, you know, it is an important one. And also, to see whether Delta, the Delta wave was affecting how CFOs felt about their own businesses. 

Hannah Munro: 6:44 

Absolutely. So, now for the exciting bit. So, what did this survey actually tell us? Were there any big surprises from your perspective? 

Ian Stewart: 6:52 

Well, I mean, it's a very upbeat survey. It's a very upbeat survey. And I think that, you know, we always distinguish between questions which relate to sentiment. So, you know, basically, how do you feel today, Hannah? Do you, by and large, feel happy? Those sort of questions. We don't ask questions exactly like that, but we ask, you know, do you think the outlook's improving and so, on? And then the questions which are... are you planning to increase capital spending? Are you planning to do M&A? So, that's much more like asking you, Hannah, are you going to go and buy a washing machine tomorrow or a sports car? Because sometimes you do find that sentiment moves, but you don't see the actual planned behaviours of CFOs moving as much, which may reflect the fact that there's a lot of uncertainty. And what... I guess we're seeing in this survey is that we did see a big rise, very, very big rise in sentiment in the last quarter, very strong sentiment this quarter. But actually, what it's doing is changing the way in which CFOs are running their balance sheets. And they have shifted decisively from what they were doing before. six, 12 months ago, which was about building up cash, cutting cost, reducing debt. So, really bomb-proofing the balance sheet of the company. So, battening down hatches for what proved to be a huge contraction in the economy. And they've completely switched towards M&A, investment, and growth strategies and building up cash, reducing costs have dropped down the league. So, I think, you know, what we're seeing is signs that, you know, we've heard a lot about pent up demand, haven't we, about consumers saving a lot of money and consumers rushing out and spending money on new cars and all sorts of things. I think there's a similar story going on in the corporate sector. The big corporates built up cash and strengthened their balance sheets during the downturn. Not all of them, but many of them. And with the recovery coming and, in some areas, demand coming in much stronger than expected, they're now planning to, they want to grow their business. If I were sitting in the Bank of England or number 10, I'd be encouraged by this because I think what it suggests is that we're getting a recovery, which is not just about consumer spending, but it's also about companies spending and building capacity. 

Hannah Munro: 9:41 

So, with that increased cash flow, what does that mean for where companies are going to be investing? Is there any prioritisation around that at all? 

Ian Stewart: 9:52 

Yeah, I mean, we're seeing very strong readings for companies much all forms of spending so, capex hiring and actually discretionary spending CFOs rarely seem to be very keen on discretionary spending but actually within that the area which really comes out is technology and IT so, sentiment about spending there is particularly strong and I think that probably picks up on a theme we've seen over the last 18 months or so, which is even during this huge downturn, investment in technology in a lot of companies has held up. I mean, for some, it's been an absolute necessity. For others, there's been an opportunity to make changes, which perhaps might be difficult in other circumstances. But I think one of the encouraging things out of this survey is this focus on technology as a way of helping improve business performance And of course, businesses are also having to cope with a different world of work and different working patterns, which are likely to mean technology is very much to the fore. 

Hannah Munro: 11:07 

And you mentioned discretionary spending. What do you classify as discretionary? 

Ian Stewart: 11:13 

Well, I mean, I think it's a very good question. We don't specify exactly in the question, but I would say for a lot of CFOs, which would be things like training, education, travel, hospitality, entertainment, maybe things like marketing subscriptions. So, you know, a whole raft of things. And I think it'll vary on the, you know, within the company. But I mean, I'm quite interested in this because, as I say, we found that over the last 12 years, cost control has remained a very big focus for CFOs, actually during the global financial crisis, but afterwards. And that sort of focus on cost seems to have reduced quite significantly over 

Hannah Munro: 12:07 

And is that correlated to, because I think in terms of one of the outcomes was that they're very much focused on growth. So, is that investment piece, is it seen as more of an investment, this spend, or is there anything else driving why this spending is increasing? 

Ian Stewart: 12:27 

Well, I think there are probably a couple of things that work. One is that companies in the UK are, in some sectors, are seeing a tremendous surge in demand. And in a lot of sectors, capacity is reduced. You know, we see that in areas like hospitality. So, that combination of very strong demand and reduced supply means that there's a race to increase capacity. And this is exactly the problem that the global semiconductor industries had. Nobody, least of all the car industry, anticipated the pace of the turnaround. And so, we now have a world shortage of semiconductors and rising prices and surging investment in manufacture of semiconductors. And I think that is a sort of microcosm of what's happened to a lot of sectors. So, there's firstly about building capacity, but I think the other thing is about trying to improve productivity, profitability, and there's a range of products. And I think that technology is seen as a way of helping to do that. I mean, we know from history that often big downturns are followed by quite significant structural change in economies. So, downturns shake up economies. And, I mean, this has been a very big downturn, and, of course, it's forced upon us all sorts of change. And I think it's plausible that coming out of it, CFOs see an opportunity to rethink some of the things they're doing, and they change. see a combination of sort of organisational change and the use of technology as being a way in which they can drive productivity and profits. 

Hannah Munro: 14:30 

And you mentioned a few industries there, so, manufacturing and hospitality being the ones you've just obviously commented on. But were there any surprising trends across industries that you weren't expecting or any interesting trends that were identified? 

Ian Stewart: 14:47 

Well, I mean, to me, the really interesting sectoral story is that the pain in this downturn has been distributed very unevenly across the economy. And I think you can distinguish between three types of sectors. The first are sectors like, say, information and technology, the utilities, which were very little affected or sort of modest effect from the downturn in the first place, you know, so, demand held up. And they are operating now at levels of output which are close to or even higher than where they were before the crisis. So, there are those resilient sectors. You've then got sectors like say manufacturing, construction, retail, which had a huge hit to activity during the downturn, but has snapped back very, very quickly. So, much so, that, of course, in some areas, we're seeing skill shortages. And I think the third category are the sectors which were very badly affected by the downturn. I mean, hospitality, leisure, and the arts sector is the most compelling example, where output is still operating an awful lot lower than it was before the pandemic. So, I think that's a useful way of thinking about things. Those who by and large got through very well, those which suffered a lot but have bounced back strongly, and those that suffered a lot and haven't bounced back much less. And I think that feeds through to the question of, well, as government support winds down, which sectors are likely to see more distress coming through in terms of things like insolvencies. It's clear that there are some sectors which have suffered much more strain than others. 

Hannah Munro: 16:48 

And talking of availability of funding, has there been any change in the availability of credit, etc., driving this increase? Or is this mostly cash reserves that are then being able to be spent? 

Ian Stewart: 17:07 

Well, I think it's a combination, actually. I mean, I think we're in an environment where it's very easy for corporates to raise money, particularly large corporates. Banks are extremely willing to lend and at very attractive rates. It's The bond market yields in the corporate bond market have fallen significantly, even for higher risk corporates. So, debt finance is cheap and available. And we're starting to see more equity finance. So, we are starting to see some IPOs coming through. So, I think the kind of capital raising environment is very conducive to a recovery, but it is, as you say also, the fact that corporates are sitting on very, very big cash balances. There was a step change in levels of corporate cash. Now, that again is distributed very unevenly across the economy. It's skewed towards larger companies, but those larger companies do tend to be disproportionately the drivers of capital spending in the economy. So, this is a really, really unusual recovery, one accompanied by extremely loose credit conditions and by companies with very, very strong balance sheets or larger companies with very strong balance sheets. That's very different from previous recoveries where often the corporate sector had taken a real knock and where interest rates were high and credit was hard to come by. And I think it fits with the idea of a strong snapback in activity with CapEx playing a big role. 

Hannah Munro: 18:44 

So, I guess the one question that seems to have almost died off the radar with all of this talk of COVID and what's happening is Brexit. So, is Brexit still a concern? Has that come up at all in the latest results? 

Ian Stewart: 19:00 

Well, we do ask about Brexit, and we have been for the last four and a half years. I mean, what we've seen in the survey is that it's really sort of dropped down the list of pressing priorities for most of the last four and a half years, it's been the dominant priority. It was supplanted, of course, by the pandemic. It's now, I think, about item seven on the worry list. Now, what we found pretty consistently is that CFOs think that Brexit will not be good for the business environment, and that continues to be the case. And I've just been this morning looking at a survey by Bayes, the government department of companies, which actually shows that for big companies, the problems they're facing as a result of Brexit aren't hugely changed from the beginning of the year. I think what has happened, Hannah, is that Brexit's gone from being this massive existential issue, which is affecting people's optimism, their willingness to invest, casting a real pull over the economy to something which is a practical and real problem for a material number of companies. And it's also one of many problems they're coping with. And so, it's not to say this has not gone away, I think it's just joined the ranks of operational challenges for companies in this kind of environment. I think that's quite important because what I think it means is that Brexit is exercising much, much less effect on the willingness of corporates to invest than it did really ever since the referendum in 2016. 

Hannah Munro: 20:47 

Yeah, and certainly anecdotally, when I'm speaking to our customers, obviously we've got quite a number in manufacturing distribution. I think it's more around the clarity around how, like you say, the operational aspects of Brexit than it is necessarily about the concept. So, it'll be interesting to see how that progresses over the next few years and as things shift. And so, you mentioned seven, I think it was number seven on the list of worries on the CFOs. So, what sat above Brexit? Obviously COVID, you know, I think that's obviously one. Was it number one on the list or was there something else surpassing? 

Ian Stewart: 21:25 

it? COVID's number one, but I'll tell you the one that really surprised me is number two is inflation. Oh, 

Hannah Munro: 21:31 

interesting. 

Ian Stewart: 21:32 

Yeah. So, I mean, we haven't really talked about this, but I guess the other thing that a lot of companies are facing are these bottlenecks and rising input prices and, in some sectors, rising labour costs. And, you know, we're seeing the same anxieties in financial markets where, you know, seeing some quite big moves in bond and equity markets driven by fears about the possibility of earlier interest rate rises. So, there's a really, really big debate going on about whether the sharp rise in inflation we've seen over the last six months in the UK, US and Europe, whether that's just transient and whether that reflects the kind of bounce back in commodities and these short-term bottlenecks and next year inflation will fall and that's the view of most central banks or whether this is going to be a more profound shift towards higher inflation, which is going to mean that we've all got to cope with higher interest rates earlier than we were expecting. Now, at the moment, financial markets remain very optimistic that central banks are going to be able to take their time in terms of raising interest rates. But I mean, it would be a game changer if there were a dramatic shift towards earlier monetary tightening, because one of the things that makes this such a staggeringly strong recovery is just that money is cheap. policy is extremely loose. It's harder to imagine how it could be much looser. And if that changed in a significant way quickly, I think that would cause a rethink about prospects for the strength of the recovery. 

Hannah Munro: 23:14 

Absolutely. And I guess, so, you mentioned some of the things that were driving inflation. So, I Was there any detail on what sort of challenges, obviously rising commodity prices, I'm assuming, so, imports and export issues caused by Brexit, anything else driving that awareness. 

Ian Stewart: 23:35 

of risk? Well, high levels of skill shortages being reported by the CFOs in this survey. And I think the concern is, is going to be about margins and pricing power. So, you know, to what extent, well, actually, I'm sorry, margins, pricing power, and actually simply the sheer ability to deliver on orders when there are, you know, some components. I mean, you've seen this in the car industry where many manufacturers have had to slow production, but whether some companies are going to be able to meet demand. So, I think there are concerns about the revenue side and there's also concerns about the margin side. So, I mean, this is going to be very, next few months is going to be very important because central banks will be watching closely to see whether higher input costs, wage costs, are being passed through in terms of pricing. I mean, my personal view is that I wouldn't be surprised if we start to see financial markets bringing forward the timing of rate rises, not dramatically, but I think given the sort of speed of this recovery and the pace at which some inflationary pressures have emerged, I think central banks may want to put a kind of touch on the brake sooner rather than later. 

Hannah Munro: 25:04 

It does sound like there's an awful lot of optimism and a lot of cash out there. So, that would be, I guess, a reasonable next step for central banks to look at. 

Ian Stewart: 25:15 

Well, you're absolutely right. I mean, in normal times, they would have been slamming on the brakes. I think the concern is that... if there's so, much uncertainty about the direction of this pandemic, I mean, of course, it is nowhere near over. Just look at what's happening in Africa, Indonesia, places like Taiwan. Case rates are high. And it's not the Delta variant. It's what comes after the Delta variant. So, I think policymakers are very loathed to move aggressively on tightening until they think this recovery is... out of the woods. And although it's strong and likely to remain very strong, that's not a foregone conclusion at the moment. 

Hannah Munro: 26:03 

So, we mentioned, obviously, inflation, a big driver, and I guess a big risk. You mentioned skill shortages. So, what was the feeling around skills and has that changed over the last couple of quarters in terms of their perception of skills? 

Ian Stewart: 26:22 

Yes, it has. So, we're getting a lot more CFOs reporting skills shortages. And I think this kind of cross-checks with the data. You can look at data on job vacancies by sector and employment. And in some sectors like logistics, manufacturing, construction, some areas of hospitality, there's been an extremely strong snapback. The it's hard to work out exactly what's happening in the labour market. The official data show incredibly strong wage growth, but you've got to remember about 7% year-on-year wage growth, which is just staggering. Those data are not correct in that what's happened is that the composition of the labour market has changed in the last 12 months. So, the people who are in work today, by and large, tend to be in sectors where pay is higher than all the people who were in work a year ago. There are about 2 million people who aren't in work today. So, the numbers have been distorted, but nonetheless, we are starting to see pressures emerge. The hope is that as furlough unwinds and as these people who left the job market come back into it, that will help dampen down wage pressures. But I think that's, you know, the other factor is Brexit. There was an exodus of overseas-born workers from the UK last year. I mean, maybe 600,000, 700,000, huge effect. And a lot of them won't come back. I mean, the ability to enter the UK has obviously changed for less skilled European workers. So, I think one way or another, we're going to have to get used to a labour market where finding people and hanging on to them is more challenging than it has been for quite some time. 

Hannah Munro: 28:20 

And out of interest, did your survey cover any of the other elements of employment? So, things like perhaps a shift to more flexible hours or any impacts that that might have on what CFOs are thinking of doing and budgeting? 

Ian Stewart: 28:38 

Yeah, well, we've asked this question, and I think there is an expectation that we are going to move to a world in which work is less focused on the office. I mean, the phrase that seems to be wheeled out is blended or hybrid. So, some sort of a combination of the two, there are obviously exceptions to that. But I mean, it's worth noting, I mean, levels of home working have been rising for 20 years, more than 20 years at a slow pace. My feeling is what we've experienced in the last 16 months or so, has been such an astonishing experiment and has demonstrated actually a very much higher proportion of activity can be done outside the office. And I think a lot of that is likely to stick. And that's, I mean, I think that creates a whole set of challenges. I've talked to a couple of companies in the last couple of days, one in hospitality, one in transport, where the message was that they have found they're losing people from cooks and drivers to sectors where they can work from home and where ours are less antisocial. You know and then throw in the Brexit effect. You know, these are pretty powerful effects. So, I think CFOs are going to find that the issue of rewards and retention and talent are going to loom larger in the decisions they make over the next couple of years than they have in the recent past. 

Hannah Munro: 30:37 

Be interesting to understand whether that will impact this shift towards, I guess, the actual working week itself. There's been a lot of talk around the concept of a four-day week and whether, you know, that becomes a tool in certain industries toolbox to actually to bring more talent through. So, yeah, it's an interesting piece. 

Ian Stewart: 30:58 

It is. And I think, you know, how you, you know, are there different ways of competing in the labour market other than the obvious one of raising pay? And I think that, you know, the nature of work and the trade-off between, you know, pressure and location, the sort of quality of work, I think, it could be really quite salient. So, I mean, you probably have heard that terrible phrase, the war for talent, but I'm hearing it a lot. There is a lot more. It's a long time since I've heard that phrase. But I mean, I think it does capture the fact that this is likely to be a jobs market in which employees have more bargaining power and more leverage than they did before the crisis. 

Hannah Munro: 31:48 

So, with this shift in terms of talent, you know, with talent, everything that's happened with Brexit, is it affecting, because you talked a lot about growth, is it affecting how companies are looking to grow in terms of are they looking to expand abroad? How are they looking to sort of develop the businesses? Is that something that came up on the survey at all? 

Ian Stewart: 32:10 

Well, I think what we have seen is that I think a lot of companies see the pandemic as an opportunity to think about their business in a different way and posing questions about the structure of work, about the balance of the balance of sales, you know, where you're selling about. I mean, Brexit clearly is a very big factor. So, I mean, I think the sort of message to me is, for me really, is that I don't think this is a sort of communal garden recession, where it hasn't been a communal garden recession. And I think that, therefore, the consequences of it in terms of all sorts of things. I mean, you know, obviously things like the structure of work, the size of government, government borrowing, the use of technology, attitudes to the state, the focus on resilience over efficiency. There'll be a whole series of changes. And I think these are going to have very big effects on the environment of the business. I mean, the other thing we haven't discussed really is the way in which climate has actually changed the action on climate change has actually increased during the pandemic. And I think that has become an absolutely mainstream corporate risk, which is affecting how certainly big corporates are making decisions right now. And I think we're all familiar with ESG. But I think this has become an issue which is a general business risk and opportunity. You know, you've got to be wary of proclaiming new dawns and new eras. But I think this is quite a profound change. I mean, if you look back at economic history in the last 80 years, there were certain dates which were very important. And 1945 was important because it obviously ushered in a period of much, much bigger government. 1979 was important because it was the beginning of the Thatcher era. I mean, 2008, the financial crisis, I think the pandemic will be a very consequential landmark, not just for public health, for obvious reasons, but also for business and the structure of the economy. 

Hannah Munro: 34:48 

And you mentioned climate. So, what did the survey say about the CFO's attitude and view on the impact of climate change? 

Unknown: 34:58 

Yeah. 

Ian Stewart: 34:58 

Well, I mean, as I said earlier, we're increasing the number of questions, but we also question about how would you place this as a risk to your business? And it's the third biggest risk. So, the top risk is the pandemic. The second risk is inflation. The third risk is climate. Now, I think that's really interesting because I think you know, this is obviously not a new issue. I think at any time in the last 10 years, a lot of CFOs would say this is a huge issue in the same way that, for instance, how government will be able to pay for pension and healthcare liabilities is a huge issue for an ageing population. But I think the difference is that the time horizon over which it is having an effect on the actual behaviour of companies has dramatically shortened. And the combination of regulation, scrutiny, pressure from investors, the market, all of these things are having an effect. And I think what it means is CFOs, whatever you thought about Brexit after whatever it was, June of 2016, it's like you had to know how it was going to affect your business. And it wasn't, you know, that wasn't like a long-term thing. It was like tomorrow, like if this happens next year, what effect will it have on us? And I think climate is, it is the same with climate. It's gone from being one of these big long-term issues to a big, much shorter-term issue. 

Hannah Munro: 36:44 

And was there any detail around the view of the risk in terms of, was it just around the size of the impact generally? Or is that something that you're looking to investigate as you go further? So, what aspects of climate change do they think are going to impact? 

Ian Stewart: 37:02 

Yeah, what we'd really like to do, Hannah, and actually if anyone's got great ideas for this, it's surprisingly hard to come up with questions you can ask again and again and again where you can gain value. But what we'd really like to understand is how it actually affects the way in which you run your business. So, how does it affect your capital allocation, your attitude to risk? Does it change the hierarchy of business? You know, all your stakeholders, does it suddenly mean that, you know, that hierarchy is changed? What opportunities does it create? Because, you know, we know that there's going to be huge growth coming out of this. There's going to be... You know, this is an epic energy transition. We've seen energy transitions before. We saw them, you know, the transition from steam to electricity, you know, from canal power to waterpower. So, this has happened before. What is unprecedented, to use a tired word, but is truly unprecedented, is the speed of the required transition. And its completeness. There's never been an energy transition before where you've had to pivot so, completely away from an existing source of energy. So,, you know, I mean, I think that we need to think of this obviously as a sort of existential human challenge, but I think we also need to see it as something which will remake the economy and it'll remake industries, it'll create new industries, it will create winners and losers like all big structural change does. 

Hannah Munro: 38:49 

So, in terms of your big takeaways from this particular survey then, what were your sort of striking moments and your sort of highlights from this survey? 

Ian Stewart: 39:02 

Well, I mean, to me, I think this is the survey that the Bank of England has been wanting to see from us for 12 years, because this is the series where CFOs are telling us they are going for growth. And, you know, this is about CapEx technology and people. It shows high levels of risk appetite. It shows that there is a kind of confidence about this recovery, which means that CFOs don't only feel better, but they want to commit themselves to actions which change the orientation of their business. And that's the kind of thing which points to a sustained recovery because the CFOs are clearly very savvy people making very important decisions and they're making these kind of commitments and these sort of plans are very important to a sustained recovery. So, I think that to me is overwhelmingly the strongest conclusion. I think that the I'd also add that I think we must keep a really close eye on inflation risk because what would put a spanner in the works of this beautiful recovery is clearly either a fourth wave or inflation calling time on this easy money policy party that central banks have been running globally. This isn't an outlook without risk. And I think that all of us in business have got to keep an eye on those risks, accepting that the most likely outcome is a strong recovery. 

Hannah Munro: 40:55 

And in terms of your views on your next CFO survey, what are your watch points? What are you looking for? And are there any changes to the questions that you're going to be asking in the next one? 

Ian Stewart: 41:05 

Well, we really avoid tinkering with the questions. We have a set of questions which we ask, but we do adjust them at the margin. And actually, we're going to be delving a bit more into productivity and the opportunity for companies through business change and through CapEx to drive productivity and also productivity on climate change. That's going to be a permanent feature of this survey. And as I say, really, really unusual for us to do this because I think at any one time you can say there are lots of issues that come across the desks of CFOs like cyber, like geopolitics. And we don't put in permanent questions on them. I think climate is just different And I think that in the way the CFO's really been in many situations, the person who in times of great stress, the pandemic, the global financial crisis, they've had to give a lead and had to explain the outside world. I think the CFO will find themselves having to do quite a lot of the thinking about the practical consequences of climate change for particular businesses. So, yeah, that will be a permanent feature of the survey. 

Hannah Munro: 42:22 

Another string to the bow for those CFOs out there in terms of roles and responsibilities. 

Ian Stewart: 42:28 

Well, it's a very good point, Hannah. I mean, in the time I've been doing this job for 12 years, I think the CFO's role has, you know, it's really broadened out. I mean, there's this idea, you know, there's a sort of concept of the CFOs being the sort of steward of the company's finances. You know, it's clearly so, much more than that in terms of relationships, intelligence, understanding markets, strategy. And I think you're right. I mean, I think that, you know, the question is, you know, when somebody wants to call up a member of the board about climate, who do they speak to? And I mean, it has ultimately, it has big financial decisions. And that means you're probably going to want to speak to the CFO. 

Hannah Munro: 43:12 

Absolutely. Well, thank you so, much, Ian, for sharing your thoughts on the CFO survey. It's been a fascinating one, but surprisingly positive given the current circumstances and what's happened in the last 12 months. So, exciting to hear what's coming next. So, yeah, thank you again for sharing. And I really appreciate you coming back on the show for a second round. 

Ian Stewart: 43:36 

Well, thanks very much, Hannah. Great pleasure to be here. And let's just hope this survey keeps getting stronger. 

Hannah Munro: 43:42 

Absolutely.