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Deloitte CFO Survey reveals fall in confidence as fear of ‘double dip’ increases

5 July 2010

  • Financial optimism amongst finance chiefs drops to a 12 month low;
  • Chief Financial Officers (CFOs) see a growing risk of a ‘double dip’;
  • Two thirds of CFOs expect tighter fiscal policy to have negative effects on their company in the short term;
  • However, 31% foresee long term benefits for their companies from the coming fiscal squeeze;
  • CFO sentiment about the availability of credit has reached the highest level since the CFO Survey began in 2007;
  • Cost control remains king for most CFOs;
  • Cash flow recedes as a major priority for CFOs as expansionary policies to raise revenue and capitalise on growth climb the agenda.

Optimism among UK CFOs has declined for the second quarter running, reaching a 12 month low, despite a continued improvement in credit availability.

The second quarter 2010 Deloitte CFO Survey findings indicate that recent volatility in financial markets and concerns about fiscal tightening at home and abroad have weighed on CFO sentiment. CFOs now see a 38% chance of a “double dip”, up from 33% in the first quarter of this year.

CFOs see fiscal tightening bringing more direct risks than benefits for UK corporates. Two thirds of CFOs expect tighter fiscal policy to have short term negative effects on their company and 69% foresee few or no direct long term benefits.

However, the clearly stated view of CFOs in last quarter’s Survey, conducted just before the General Election, was that fiscal consolidation is essential, with 85% of respondents saying that deficit reduction should be the new government’s top priority.

Encouragingly, a substantial minority of CFOs, approximately one third (34%), expect few negative effects from fiscal tightening in the short term and, indeed, 31% foresee benefits in the long term for their companies.

While the external environment looks less positive, some pressures on corporates’ balance sheets are easing. The cash crisis in the corporate sector has abated significantly and companies are more bullish about prospects for their own cash flow than at any time in the last two years. Financial risk appetite among CFOs has not, so far, been dented by doubts about the recovery.

Ian Stewart, Deloitte chief economist, commented: “Crucially, credit conditions for larger corporates are getting better. CFOs now rate credit as being more available than at any time since the CFO Survey started in the third quarter of 2007. Bank borrowing has regained its pre-recession appeal to CFOs as a source of funding. CFOs see a more attractive and available supply of bank credit driving growing demand for bank borrowing over the next year.

“The latest CFO Survey paints a picture of concern about growth coupled with improvements in the corporate credit and liquidity environment. Examining how CFOs plan to run their companies’ finances enables us to see how corporates plan, in practice, to reconcile these pressures. Cost control remains the top priority for UK CFOs, as it has been for the last two years. With fears of a double dip increasing, CFOs are maintaining a strong focus on costs.

“Yet cash flow is no longer the central pre-occupation that it was and has dropped down CFOs’ list of priorities. Expansionary including capital spending, expanding into new markets and launching new products and services, have shifted up the priority list. A majority of CFOs expect M&A activity to rise over the next year.

“Recent financial market turbulence has made finance directors much more cautious about financing their companies using equity. This shift in preferences underscores the close relationship between financial market activity and corporate attitudes.”

Margaret Ewing, vice chairman of Deloitte, added: “A recurring theme from the CFO Survey in the last year has been uncertainty about growth prospects. Uncertainties have mounted, yet, at the concerns about liquidity and credit are easing. CFOs are focussing more on how to capitalise on growth, no matter how unsure and patchy.

“The last three years have been a period of exceptional volatility. CFOs are not convinced the problems are over, but what emerges from this quarter’s Survey is that CFOs are alive to the risks and looking for opportunities in what lies ahead.”


Notes to editors:

About the Deloitte CFO Survey

This is the twelfth quarterly survey of Chief Financial Officers and Group Finance Directors of major UK companies. The survey took place between 11th and 25th June 2010. 125 CFOs participated including the CFOs of 32 FTSE 100 and 44 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 93 UK listed companies surveyed is £446 billion, or approximately 28% 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 earlier 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 (‘DTT’), a Swiss Verein, whose member firms are legally separate and independent entities. Please see\about for a detailed description of the legal structure of DTT and its member firms.

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

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