The Big Four firm’s latest survey, conducted in late September, found that a net 84% of finance leaders expect operating costs to increase over the next year, the highest level recorded in more than four years.

Geopolitics has rated as a top concern for CFOs in all but two quarters since the invasion of Ukraine. However, CFOs now attach a slightly lower risk rating to geopolitics, with an average score of 62, down from 71 in the previous quarter.

Meanwhile concerns about UK productivity and competitiveness have risen to the highest level since Deloitte began asking this question in 2014 and now rank joint first with geopolitics on the CFO risk list, with a weighted average rating of 62.

Ian Stewart, chief economist at Deloitte UK, said: “The focus for CFOs has shifted, with geopolitical anxieties, a dominant concern for some time, moderating in the wake of a series of US trade deals.

“Domestic challenges have moved centre stage, with costs rising and mounting concerns about UK competitiveness. CFOs have responded by strengthening balance sheets through a focus on cost control, building cash reserves, and reducing debt.”

A net 47% of CFOs expect to see a fall in operating margins over the coming 12 months, the highest reading since Q2 2023 where it was 57%.

CFOs report a slight acceleration in wage growth, with average wages at their own businesses rising 3.5% over the past 12 months.

Finance leaders also expect inflation to stand at 3.2% in a year’s time, an increase from their average expectation at this time last year, which was 2.4%.

Finance chiefs continue to assume a defensive strategy stance, with cost reduction and cash control their top two priorities for the coming 12 months. CFOs have shifted away from expansionary strategies, with a lesser focus on introducing new products or services (25%), increasing capex (12%) and expanding by acquisition (11%).

The proportion of CFOs who report that expanding by acquisition is a strong priority is, with the exception of the early days of the pandemic, at its lowest level since at least 2010.