Treasury Outlook: A Case of Déjà Vu as 2023 Unfolds?

Before the 2020s got underway, corporate treasurers and CFOs doubtless felt they had already faced a formidable set of tasks at the start of each year. But a turbulent decade is adding more challenges to their agenda, from resurgent inflation to the impact of war in Europe. What can treasurers do to stay a step ahead, or at least not end up on the back foot? Is technology the answer, or a closer focus on people, skills, and technical treasury prowess?

With January done and dusted, it might feel like the toughest part of 2023 is over. But as corporate treasury teams prepare to navigate through the remainder of the year, the disruptions of the recent past – principally Covid-19 and war in Ukraine – create a highly uncertain landscape ahead. After all, the pandemic’s supply chain disruption and lockdown-induced acceleration of new working patterns have now been joined by a massive spike in energy costs, commodity prices, and supply volatility triggered by Russia’s invasion of its neighbour.

Inflation has also spiked to 40-year highs in many economies and accelerated the end of more than a decade of low-to-zero interest rates. While there are signs that inflation peaked in many countries in late 2022, whether it can rapidly return to the 2% level sought by the world’s major central banks remains questionable – in economies across the globe.

In the UK, for example, The Bank of England (BoE) predicts that inflation will have returned to 5% by the end of this year but then sees it falling to 1.5% by Q4 2024. However, as the British Chambers of Commerce (BCC) has cautioned “this simply means prices will stabilise at a very high level and Government plans to reduce energy support after April 2023 could put upward pressure on inflation again”. And Julie Fabris, Treasurer, Britax Childcare Group, sees little to support the BoE’s optimistic inflation outlook.

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