Business environment outlook 

Key facts

• The share of respondents who believe there is a high level of uncertainty has increased by 9 percentage points (pp), from 31% in 2018, to 35% in 2019 and to 40% in 2020.
  
• As in 2019, the majority of CFOs do not think the year ahead will be a good time for companies to take on more risk; this was the view of 74% of respondents (up by just 1pp from last year).
  
• CFOs still perceive increasing costs as the most significant threat to business over the next year, despite a 6pp decrease to 51% since 2019.
  
• As in the preceding years, in 2020 the overwhelming majority of respondents (91%) predict a rise in workforce costs.  

External financial and economic uncertainty

The survey recorded no significant shifts since last year in the perceived levels of uncertainty facing respondents’ businesses. That said, there is a clear tendency towards more pessimistic expectations. This is especially true when we compare the results from 2020 with those from 2018. The share of respondents who believe there is a high level of uncertainty has increased by 9 percentage points (pp), from 31% in 2018, to 35% in 2019 and to 40% in 2020. The share of those anticipating a low level of uncertainty fell by 3pp, from 11% in 2019 to 8% in 2020.

Cost expectations

Since 2017, CFOs taking part in the survey have expected costs to increase. As in the preceding years, in 2020 the overwhelming majority of respondents (91%) predict a rise in workforce costs. Most respondents also predict an increase in overall production and delivery costs (80%) and transportation costs (77%). Clear majorities expect VAT (82%) and corporate tax (76%) to remain stable. Cost categories that depend on manpower are those believed to be at the greatest risk of cost increases in the year ahead.

Risk landscape

CFOs still perceive increasing costs as the most significant threat to business over the next year, despite a 6pp decrease to 51% since 2019. Another of the CFOs’ greatest concerns is a shortage of qualified workers during the next 12 months, again showing a 6pp fall to 49% since 2019. Between 24% and 29% of respondents chose four other factors – market pressure to reduce pricing, reduced demand (both domestic and foreign) and legal instability.

Sources of funding

CFOs see internal financing and bank borrowing as the most attractive sources of funding for their companies. These options were selected respectively by 50% and 49% of respondents. Corporate debt and equity are seen as moderately attractive – less than 30% of CFOs call them ‘attractive’, while half of respondents see them as neither attractive nor unattractive.