The Deloitte CFO Survey: 2007 Q4 results
The credit crunch bites: 2007 Q4 results
The fourth quarter 2007 Deloitte CFO Survey provides detailed evidence of the early effects of the credit crunch on the UK corporate sector.
The survey took place between 30th November and 11th December and shows a rise in concern about the impact of the credit crisis on major UK companies compared to the prior quarter. CFOs report that in the last 3 months credit has become more expensive and harder to obtain. This, in turn, seems to be triggering a shift away from
debt-driven strategies by UK corporates.
58% of the CFOs in our sample expect the credit crunch to have a negative effect on their business in 2008. This contrasts with other recent surveys of CEOs, who would appear to be slightly more optimistic than CFOs, and with only 42% of CFOs in September expecting a negative impact (page 2, chart 2).
The CFO Survey provides strong evidence that the effects of the credit crisis have spread from the banking system to the corporate sector. In the process, it seems to be changing attitudes on how corporates should finance themselves (page 3):
- Only 37% of CFOs said that their companies plan to raise gearing in 2008, down sharply from the 56% recorded in September.
- Three quarters of CFOs reported that events in credit markets have raised the price of credit and two thirds said it has also reduced credit availability.
- The proportion of CFOs who rate bank borrowing as an attractive source of external finance for their business has dropped sharply, from 73% to 44%.
For further information, download our report The Deloitte CFO Survey: Benchmarking Corporate Financial Attitudes. (PDF, 353KB)