 The first quarter Deloitte CFO Survey sheds important new light on how larger UK corporates are reacting to the credit crunch. The survey key findings are: - Despite reductions in Bank of England base rates corporates are finding that credit has become pricier and harder to obtain. So far, at least, rate cuts have not improved credit conditions for corporates;
- With CFOs expecting credit conditions to remain tough for some time corporates are looking hard at their cost base. 65% of CFOs say they are likely to cut discretionary spending, such as travel and entertainment. 55% plan to cut future hiring, 38% to cut current employee numbers and 38% to cut capital investment.
- CFOs believe that UK equities are undervalued and think that lower equity values and less competition from private equity are creating opportunities for corporate M&A;
- CFOs think the credit crunch has at least 6 months still to run; but most see credit conditions improving by mid 2009. With an anticipated improvement in credit conditions by mid 2009 CFOs remain fairly positive about the longer term debt outlook. Most CFOs say they plan to issue debt in the next 12 months and more plan to raise gearing over the next year than to reduce it.
The first quarter survey was covered by the Times, the Financial Times and BBC TV. The survey was also cited in a recent key note speech on the credit crunch by the deputy Governor of the Bank, Sir John Gieve. If you would like more details about the Deloitte CFO Survey please contact Ian Stewart in Research on 020-7007-9386.
Download the full report: The Deloitte CFO Survey - Corporates respond to the credit crunch: 2008 Q1 results. (PDF, 543KB) |
