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Attractiveness of debt finance hits lowest level since 2009

  • CFOs rate borrowing as less attractive now than at any time since the financial crisis, with demand for credit flagging
  • CFOs rate credit as being the costliest since 2009
  • Finance leaders’ perception of risks related to inflation and energy fall
  • CFOs say cost control and cash accumulation are their top balance sheet priorities over the coming 12 months but, on a three-year timeframe, their focus is on technology, digital transformation and skills

CFOs see bank borrowing and debt issuance as less attractive sources of finance now than at any time since the financial crisis, according to Deloitte’s UK CFO Survey, Q4 2022. As a result of this demand for credit is well below average levels and flagging with CFOs, with only 28% saying they expect their company’s demand for it to increase over the coming 12 months.

With interest rates at 3.5%, CFOs rate credit as being more expensive than at any time since 2009. Just over two-thirds (70%) of CFOs rate credit as costly, while 45% say that new credit is hard to get.

Conducted between 6 and 16 December 2022, Deloitte’s latest quarterly CFO Survey captured sentiment amongst the UK’s largest businesses at the end of a year of high inflation, supply disruptions and rapidly rising interest rates. 78 CFOs participated in the latest survey, including CFOs of 17 FTSE 100 and 32 FTSE 250 companies. The combined market value of the 53 UK-listed companies that participated is £363 billion, approximately 15% of the UK quoted equity market.

Inflation and risk
Despite the challenging macro environment, CFOs’ perception of external risk, particularly inflation, has eased since October’s peak. The CFO risk rating for 11* of the areas tracked in the survey have declined and only two, relating to weakness in the US economy and in emerging markets, increased.

The largest decline relates to inflation, a shift that is reflected in reduced perceptions of risk around supply chains, labour shortages and the prospect of higher interest rates. Concerns about energy prices and supply have eased significantly, consistent with the decline in energy prices since the summer and high levels of European stocks of gas.

CFOs report a fall in supply disruptions faced by their businesses over the quarter and expect substantial further falls over the next two years. Only one in ten CFOs expect significant or severe supply disruptions in a year’s time, the lowest reading since the question was included in the survey in mid-2021.

On average, CFOs** believe inflation will fall sharply from its current level to 5.8% in a year’s time. However, they expect it to stand at 3.3% (well above the Bank of England’s 2% target) in two-years' time.

Ian Stewart, chief economist at Deloitte, said:
“The most aggressive tightening of monetary policy in more than 30 years is reshaping corporate attitudes to debt. Not since the credit crunch have CFOs rated debt as being less attractive as a source of finance for their businesses than they do today. When interest rates were at very low levels, debt finance easily eclipsed equity as a source of finance. CFOs now see them as being roughly on par.”

“In the last two years CFOs have had to deal with the biggest inflationary shock since the late 1980s. But the tide seems to be turning and concerns about energy supply and prices have fallen back. CFOs’ perceptions of inflation risk have dropped from October’s peak, and expectations for supply shortages, recruitment difficulties and inflation have eased.”

Hiring, skills and investment outlook
CFOs’ expectations for hiring have fallen sharply since the previous survey, with a net 59% of CFOs*** expecting corporates to reduce hiring in the next 12 months.

Although CFOs report an easing of recruitment difficulties over the quarter, almost a third still rate these difficulties or labour shortages faced by their businesses as severe or significant. They see a sharp improvement in hiring conditions in a year’s time, with just 17% expecting severe or significant recruitment difficulties by then.

While CFOs expect to reduce capital expenditure (net 62%***), discretionary spending (net 78%) and hiring (net 59%) over 2023, they are positive on investment in skills and digital over the medium term. The overwhelming majority (net 92%) expect higher investment in workforce skills over the next three years, while almost eight in ten (net 79%) expect greater investment in digital technology and assets. Finally, a net 71% expect increased productivity growth and business performance over a three-year timeframe.


Notes to editors
* The 13 risk areas tracked in the survey are:
- Higher energy prices or disruption to energy supplies
- Rising geopolitical risks worldwide including the war in Ukraine
- The prospect of further rate rises and a general tightening of monetary conditions in the UK and US
- The risk of higher inflation and/or a bubble in housing and other real and financial assets
- Persistent labour shortages
- Poor productivity/weak competitiveness in the UK economy
- Long-term effects of climate change
- Medium-term supply chain disruption
- Effects of Brexit/deterioration in UK-EU relations
- Economic weakness and/or volatility in US growth
- Deflation and economic weakness in the euro area, and the possibility of a renewed euro crisis
- Weakness and/or volatility in emerging markets
- Effects of the COVID-19 pandemic


*** Net percentages are calculated as a net balance of the share of responses in favour of an outcome. For example, the net percentage expecting a decrease in hiring has been calculated by subtracting the proportion of respondents that said hiring will increase over the next 12 months from the proportion that said hiring will decrease.

About Deloitte’s CFO Survey
This is the 62nd quarterly survey of Chief Financial Officers and Group Finance Directors of major companies in the UK. The 2022 fourth quarter survey took place between 6th December and 16th December. 78 CFOs participated, including the CFOs of 17 FTSE 100 and 32 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 53 UK-listed companies surveyed is £363 billion, or approximately 15% 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