Support for the UK remaining a member of the European Union has risen among chief financial officers (CFOs) of the UK’s largest companies, according to Deloitte’s latest CFO Survey.
The business environment has become more challenging, with CFO perceptions of uncertainty up sharply and risk appetite at three year lows. CFOs are prioritising defensive strategies and plans for hiring and capital spending have dipped.
120 CFOs of FTSE 350 and other large private companies participated in the Q1 2016 CFO Survey.
According to the survey, CFOs rank the June EU referendum as the biggest risk their businesses face. On a scale of 0 to 100 (where 100 is the greatest risk) CFOs gave the EU referendum a risk rating of 54, up from 50 in Q4 2015. The EU referendum ranked ahead of economic weakness in the euro area (48), weak demand in the UK (46) and the prospect of higher interest rates in the UK (44).
Other key findings include:
- 26 percent of CFOs say their company has made, or is in the process of making contingency plans for a possible British exit of the EU. However, 53 percent have made no such plans.
- 83 percent of CFOs say the level of uncertainty facing their business is above normal, high or very high, up from 64 percent in Q4’s Survey and the highest level since Q4 2012.
- 75 percent of CFOs say now is a bad time to rake risk onto their balance sheets, up from 63 percent in Q4 and the highest level since Q4 2012.
Ian Stewart, chief economist at Deloitte, said:
“A fog of uncertainty has descended on the corporate sector. Perceptions of financial and economic uncertainty are back to levels last seen in early 2013 as the euro crisis abated.
“Now the dominant concern is the EU referendum, which tops the corporate worry list, eclipsing longstanding concerns about emerging markets and growth in the euro area.
“Rising uncertainty has eroded corporate risk appetite. Corporates are pulling in their horns, with expectations for hiring and capital spending at three year lows.”www.deloitte.co.uk/cfosurvey