Finance chiefs voice fears for UK company prospects

Finance chiefs voice fears for UK company prospects

The number of chief finance officers who are feeling less optimistic about their company’s future as more than doubled since the general election.

The results from Deloitte’s second quarter survey of 122 CFOs of FTSE 350 and larger companies revealed 42 per cent say they are less optimistic about their firm’s prospects than three months ago, when 17 per cent felt the same. 

More CFOs felt the level of uncertainty facing their business is also rising, with 43 per cent saying it was high or very high, a 34 per cent increase on the last quarter. 

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A total of 22 per cent maintained now is a good time to take risk onto the balance sheets, a four percentage point fall on the previous quarter. 

Ian Stewart, chief economist at Deloitte, said: “Business sentiment has been on a rollercoaster in the last 18 months, slumping in the aftermath of the referendum, staging a strong recovery and then falling again in the wake of the general election.

“This latest dip likely reflects the surprise outcome of the election, so a drop in confidence is understandable. CFOs are also more focused on the prospect of slower UK growth. What is striking from this survey is that concerns around geopolitics and weak global growth, which dominated CFOs’ concerns in 2015 and 2016, have eased significantly.”

Despite the general election proving the catalyst for the change in sentiment between the first and second quarters, its impact pales when compared to specific views on Brexit. 

On this issue 71 per cent of CFOs said the business environment will deteriorate when the country leaves the EU, a rise from 60 per cent in three months and the highest proportion of concern recorded since the referendum. Only 8 per cent believe Brexit will be better for business.

CFOs also registered disquiet about the impact of Brexit on the internal running of their businesses, with 38 per cent saying Brexit would have a negative effect on hiring, up 30 per cent on the first quarter survey findings. 

A third of respondents believe Brexit will slow capital expenditure, up from around a quarter in the first three months of the year. 

David Sproul, senior partner and chief executive of Deloitte North West Europe, said: “Despite the outcome of the general election causing speculation about whether we could see a closer long-term relationship between the UK and EU, CFO’s concerns about Brexit have grown.

"More CFOs now see Brexit slowing business investment and hiring, as well as an overall weaker business environment once the UK leaves the EU.

“Business sentiment is highly sensitive to political developments and surprises. The outcome of the General Election, like the result of last June’s EU referendum, was hugely unexpected and has knocked optimism.”