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Deloitte CFO Survey Q3 2012

UK corporates more defensive as fog of economic uncertainty persists

8 October 2012

  • The Q3 CFO Survey shows a rebound in confidence after record Q2 decline;
  • However, finance chiefs see a 43% probability of the UK recession continuing or recurring within the next two years;
  • 27% expect one or more countries to leave the euro within next 12 months;
  • CFOs see the unpredictable economic and financial environment as the single largest factor constraining investment;
  • Corporate balance sheet strategies are more defensive than at any time in the last two years;
  • Despite macro uncertainty and weak growth, only one in five CFOs expect revenues to decline over the next year.

The UK’s largest businesses are adopting more defensive strategies, despite a modest improvement in confidence, according to the latest Deloitte CFO Survey. Increasing cash flow, cutting costs and reducing leverage are higher corporate priorities than at any time in the last two years. Conversely, capital spending is a lower priority than at any time in the last two years.

The Q3 Deloitte CFO Survey, which gauges the views of chief financial officers (CFOs) and finance directors from 133 major companies, including 35 FTSE 100 and 55 FTSE 250 businesses, reveals that the unpredictable economic and financial environment is the single largest factor constraining investment. Nine out of 10 CFOs rate the economic uncertainties facing their business as being above normal and 43% see a probability of the UK recession continuing or recurring within the next two years.

Recent announcements from the ECB appear to have eased, but not dispelled, worries about the single currency. On average, finance chiefs see a 27% probability of one or more countries leaving the single currency in the next 12 months. CFOs rate the weakness of the economies of the euro area as second only to macroeconomic uncertainty in its dampening effect on business investment.    

Martin Jenkins, practice senior partner at Deloitte in Yorkshire, said: “CFO optimism has made up some of the record losses we saw in the second quarter of this year, when the euro crisis intensified. Spirits seem to have been lifted by the recent promise of more aggressive action from the Federal Reserve to support growth, and from the European Central Bank to strengthen the single currency.

“Yet while central bank activism helped fuel a strong 16% rally in global equity markets between June and mid-September, the finance chiefs of major UK companies take a more cautious longer term view. The fog of economic uncertainty is hitting investment. CFOs are focussing on strengthening balance sheets with a particular focus on generating cash and reducing costs.

“Though external, macroeconomic risks remain, the internal story for large companies looks much stronger, partly because of a favourable financing environment. Credit is rated as being cheaper than at any time in the last five years and financing costs are expected to stay low. For the large companies surveyed the cost and the availability of external finance rate as weak constraints on investment. CFOs report that long term growth in demand for their products and services is providing support for capital spending.

“Despite macro uncertainty and weak growth, only one in five CFOs expect revenues to decline over the next year. Demand from outside Europe, from emerging markets and industrialised countries such as the US and Japan, is seen as providing some offset to weakness in Europe’s economies.”


Notes to editors:
About the Deloitte CFO Survey
This is the 21st quarterly survey of Chief Financial Officers and Group Finance Directors of major companies in the UK. The 2012 third quarter survey took place between 11th and 26th September. 133 CFOs participated, including the CFOs of 35 FTSE 100 and 55 FTSE 250 companies. The rest were CFOs of other UK listed companies, large private companies and UK subsidiaries of major companies listed overseas. The combined market value of the 102 UK listed companies surveyed is £633 billion, or approximately 34% of the UK quoted equity market. The Deloitte CFO Survey is the only survey of major corporate users of capital that gauges attitudes to valuations, risk and financing.

For copies of previous CFO Surveys, please visit

About Deloitte
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.

Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities.

Please see for a detailed description of the legal structure of DTTL and its member firms.

The information contained in this press release is correct at the time of going to press. 

Member of Deloitte Touche Tohmatsu Limited


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