08 October 2018

Deloitte CFO Survey: CFOs’ Brexit concerns at record high

Over the past quarter, optimism and risk appetite have fallen among CFOs and they look more willing to rein in corporate spending over the coming year.

95 CFOs of FTSE 350 and other large private companies participated in the Q3 2018 CFO Survey. The combined market capitalisation of the 66 UK-listed companies who participated is £383bn, approximately 15% of the UK quoted equity market. The survey ran from 14 to 27 September 2018.

Optimism, revenue expectations and risk appetite fall 
Overall, 13% of CFOs say they are more optimistic about the prospects for their company than they were three months ago, down from 24% in Q2.

12% of CFOs say that now is a good time to be taking risk onto their balance sheets, down from 16% in Q2.

31% of CFOs say they expect revenues to rise in the coming 12 months, down from 42% in Q2.

Brexit weighs on business spending plans 
79% of CFOs say they expect the long-term business environment to be worse as a result of leaving the EU, up from 75% in Q2. This marks the third consecutive quarter that concerns about the impact of Brexit have increased and this reading is now the highest since the referendum.

CFOs are more negative on the effects of Brexit on their hiring and spending decisions. 50% say hiring will slow over the next three years as a result of Brexit, up from 40% in Q2, and 44% say capital expenditure will slow, up from 34%. While increasing in each of the last three quarters, neither is as high as they were immediately after the referendum.

Concerns about Brexit risks increase
CFOs are more concerned about the risk Brexit poses to their business. Rating risks on a scale from 0 to 100, the effects of Brexit scored at 67 (up from 60 in Q2), followed by weak demand in the UK at 56 (down from 57 in Q2).

These are followed by the risk of greater protectionism in the US (53, up from 51 in Q2) and rising geopolitical risks worldwide (53, new question).

Concerns about weakness in emerging markets and the euro area feature at the bottom of the CFO risk list. [...]

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