Swiss companies are positive, but expect employee numbers to fall

The mood among Swiss CFOs appears to have brightened considerably, as the results of the latest CFO survey recently conducted by the auditing and consulting firm Deloitte Switzerland show. More than half of respondents (56%) are either positive or very positive about the economic development in Switzerland over the next twelve months (vs. fall 2023: 41%), while around 38% rate their expectations as neutral. The outlook is therefore solidly positive, but not euphoric. Swiss CFOs are even more optimistic about the USA, their most important trading partner: 59% of CFOs (vs. fall 2023: 41%) expect positive or very positive economic development in the USA over the next twelve months.

These positive expectations are in stark contrast to the expected economic development of Germany, the second most important trading partner, and that of China. The extremely negative assessment continues, particularly with regard to Germany: 66% of CFOs anticipate negative or very negative economic development (vs. fall 2023: 65%). Although expectations for China have improved somewhat, the majority of CFOs surveyed (47%) also expect negative to very negative development there (vs. fall 2023: 65%). A trend is thus emerging whereby the outlook for Switzerland and other important trading partners is brightening, but the forecast for Germany remains almost unchanged, i.e. extremely pessimistic.

"If the negative economic forecasts for Germany are confirmed, the Swiss export industry will have to increase its involvement in other markets. Companies need to develop flexible business models that can be quickly adapted to changing conditions. A proactive risk management strategy based on diversification and financial stability is crucial to reduce our dependence on individual markets," explains Alessandro Miolo, Head of Audit & Assurance at Deloitte Switzerland.

CFOs expect declining employee numbers

CFOs are generally optimistic, not only with regard to the good economic outlook, but also with regard to the company's prospects. Half (50%) of respondents are positive about the development of their own company over the next twelve months, while only 16% are pessimistic. These figures are similar to those from the survey in autumn 2023. The CFOs surveyed are also positive about the company's key figures: 63% expect turnover to increase and 39% anticipate rising margins.

However, one major exception stands out in the company figures: 27% of CFOs expect the number of employees in their company to fall in the coming year - whether due to redundancies or vacant positions that will not be filled.

This percentage has risen for the second time in a row. Alessandro Miolo comments: "The fact that so many companies are expecting their headcount to fall is partly due to the fact that they do not expect to find suitable skilled workers within a reasonable period of time. The labor shortage remains a major problem for many companies. However, companies are also increasingly relying on artificial intelligence and automation. As a result, this is leading to a reduced willingness to hire and a shrinking workforce." This trend is also reflected in the latest figures from the State Secretariat for Economic Affairs SECO: the number of job vacancies has fallen over the past year and SECO expects the unemployment rate to rise slightly in 2024.

Geopolitical risks quickly take first place

The Middle East conflict, the war in Ukraine, tensions between Taiwan and China and the uncertain outcome of the upcoming US presidential election: The feeling of an increasingly uncertain world is also reflected in the barometer of the biggest corporate concerns: geopolitical risks have jumped up nine places (compared to autumn 2023) and now rank in first place, while concerns about a weak economy or demand (second place) and worries about labor shortages (third place) have fallen slightly. Even if hiring intentions fall by autumn 2024, it will still be a challenge for companies to find qualified specialists within a reasonable period of time.

ESG regulations also cause concern

In the top 10 and directly in fourth place is the topic of regulation, which is a concern for many CFOs. In this context, CFOs mentioned regulations in the area of sustainability (ESG reporting) for the first time. "The increasing number and variety of regulatory requirements not only lead to an increased compliance effort, but also to additional costs for companies. In particular, the implementation and monitoring of sustainability regulations require considerable resources and investment. The survey shows that this represents a significant conflict of objectives for many CFOs, as they have to ensure compliance and achieve business objectives at the same time. In this complex and highly dynamic regulatory landscape, it is therefore crucial that companies establish a robust governance structure and continuously keep abreast of the latest regulatory developments in order to minimize risks and take advantage of opportunities," Alessandro Miolo concludes.

The economic and monetary policy situation has stabilized for CFOs: although currency risks and the interest rate environment are still in the top 10, concerns about persistent inflation have dropped out of the rankings. On average, CFOs expect a stable inflation rate of 1.5 percent in 12 months and 1.4 percent in 24 months, which is well below the two percent mark and therefore means price stability.

Source: www.deloitte.com