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CFO confidence plummets on economic uncertainty

Prospect of continued recession or ‘triple dip’ grows among CFOs

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Optimism among the UK’s top finance chiefs saw its sharpest decline since the financial crisis, marking the third major dip in the past five years because of the economic uncertainty, the latest study showed on Monday.

Chief financial officers now see an almost one-in-two chance of the recession continuing to the end of this year or for the economy to hit a ‘triple dip’ recession within the next two years, according to Deloitte CFO Survey, which measures the views of UK finance directors.

The study for the second quarter, which gauged CFO views from 137 major companies, including 96 FTSE 350 businesses, showed that economic uncertainty and the outlook for demand were the two biggest influences on changes to investment decisions among large UK-based corporates.

Few CFOs said the cost or availability of finance had influenced investment plans but an emphatic 82 percent said that demand and uncertainty had influenced investment decisions.

“Uncertainty has had a corrosive effect on risk appetite and 80 percent of CFOs say this is not a good time to take risk onto their balance sheets,” Ian Stewart, Deloitte chief economist, said.

CFOs now see a 36 percent probability of one or more countries leaving the euro by the end of this year, up from 26 percent last quarter, Deloitte said. Over a quarter of those polled said they had either made plans or were at ‘an advanced stage’ for a euro breakup, compared to 18 percent in the first three months.

Steward said the worsening UK and euro zone economic conditions and outlook had “vindicated” the underlying caution among CFOs.

“Views on the degree of risk facing the corporate sector, like the equity markets, are changeable, and this latest survey shows that CFOs see plenty of risks ahead. Economic uncertainty remains the big constraint on corporate expansion,” he added.


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