Partner Article

Optimism falls to 2009 recession levels

Optimism among the chief financial officers of major UK businesses has fallen to its lowest level since early 2009.

That is the conclusion of the latest Deloitte CFO Survey, which discovered that 43% of CFO’s believed that the UK will fall back into recession - 10% more than in the last quarter.

Given the uncertain climate, risk appetite has also fallen at its fastest rate since the survey began in 2007.

It is lowest in the financial sector and highest in the consumer goods and technology sectors.

Paul Feechan, office senior partner at Deloitte in the North East said: “This quarter’s CFO Survey shows that uncertainty and weaker growth have had a marked effect not just on corporate sentiment but also on priorities.

“This world has become riskier and more uncertain for corporates.

“Most think that a period of margin expansion is drawing to an end. CFOs are responding with a renewed focus on cost control.”

He went on to say that expectations of a revival in corporate capital spending and hiring are fading, and that there was climate of “overseas expansion and domestic caution.”

Companies which derive 70% or more of their revenues from outside the UK still see expansion as their top priority, and companies that derive 70% or more of their revenues from the UK are positioned more defensively, prioritising cost reduction and raising cashflow.

Despite entering 2011 with anticipation that corporate hiring and investment would rise, the survey has found that the majority of CFOs now expected a decline over the next 12 months.

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