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Deloitte CFO Survey: Confidence in the face of uncertainty

2 April 2012

  • Confidence up but perceived uncertainty means corporates remain defensive;
  • Fears of recession and euro break-up ease;
  • Credit availability for large corporates increased in Q1 2012;
  • Introducing new products or services, or entering new markets are, by a narrow margin, the top priorities for CFOs;
  • Most finance directors expect UK growth to remain sluggish;
  • Cost control and bolstering cash flow remain key priorities for UK corporates;
  • CFOs aim to maintain higher cash balances than before the recession.

The latest Deloitte CFO Survey of the UK’s largest companies reveals that while business confidence has improved significantly since the start of 2012, corporate strategies remain cautious.

Optimism among Chief Financial Officers (CFOs) about their companies’ finances has risen at the fastest rate since the CFO survey began in 2007, taking it close to levels seen in late 2010. Expansion – whether through entering new markets or introducing new products or services – are, by a narrow margin, the top priorities for CFOs.

However, while business confidence is higher now than in Q1 2011, corporates are less likely to be raising capital spending, undertaking M&A or introducing new products than 12 months ago. Instead, there is a greater focus on defensive strategies, including boosting cash flow and reducing costs.

The Q1 Deloitte CFO Survey, which gauged the views of CFOs from 136 major companies, including 39 FTSE 100 and 53 FTSE 250 businesses, reveals that the proportion of finance chiefs who expect a double dip recession has fallen to 30%, down from 54% in December. The number of CFOs expecting one or more members of the single currency to leave the euro this year has dropped to 26%, from 37% last quarter.

Ian Stewart, Deloitte chief economist, commented: “The worries about the risk of recession and a break-up of the single currency that dominated corporate thinking at the end of last year have eased. Stronger financial conditions, reflected in rising global equity markets, are seen to be benefiting larger UK companies, with CFOs reporting an increase in credit availability. This more than unwinds the deterioration in credit availability seen in December which, at the time, some feared could be the start of a second credit crunch.”

“Perhaps surprisingly though, the balance sheet strategies of large companies remain cautious. Rising levels of optimism have not yet led major UK corporates to adopt significantly more expansionary policies.

“The marked deterioration in UK and European growth prospects in the second half of 2011 derailed what, in early 2011, looked like a solid recovery.  That episode underscored how macroeconomic risks can escalate and how quickly the outlook can change. This quarter’s CFO Survey shows a strong rebound in UK corporate optimism from December’s lows. However, having been wrong footed by a weakening of the economy in 2011, UK businesses may need more evidence that the recovery is on track before committing to more expansionary policies.”

Perceptions of uncertainty have eased since December but the world remains unpredictable and 84% of CFOs still rate the general level of uncertainty facing their business as being above normal. Record petrol prices and rising concerns about the pace of debt reduction in Spain underscore the varied and changeable nature of the macroeconomic risks facing corporates. In the background is the possibility that rates of growth in the UK and other industrialised economies will be slow to return to pre-recession levels.

CFOs are not counting on a swift return to pre-recession rates of growth. Most expect the UK’s current weak patch in growth to last for more than a year.

Ian Stewart, Deloitte chief economist, concludes: “Current, near record levels of cash being run by the UK corporate sector may well be a symptom of caution on the part of businesses. A majority of CFOs say that they aim to run higher cash balances then before the financial crisis. One interpretation is that relatively high levels of cash being held by UK corporates represent an insurance policy against a volatile, slower-growth environment.


Notes to editors:

About the Deloitte CFO Survey
This is the 19th quarterly survey of Chief Financial Officers and Group Finance Directors of major companies in the UK. The 2012 first quarter survey took place between 9th and 26th March. 136 CFOs participated, including the CFOs of 39 FTSE 100 and 53 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 101 UK listed companies surveyed is £610 billion, or approximately 32% 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.

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