By Maximilian Clarke

Optimism among Chief Financial Officers from the UK’s biggest corporates has fallen over the past quarter, further eroded by the worsening global economic outlook, Deloitte suggest.

Research by the ‘big four’ professional services firm suggests that 43% of leading CFOs this quarter anticipate a return to recession- up from 33% the previous quarter, whilst the number concerned about the effects of macroeconomic instability on their company has almost doubled.

This has reduced appetite for risk, particularly for the financial sector, though the technology sector remains more open to risk. This shift in risk aversion has led to a tilt in balance sheet strategies employed by CFOs. For the first time in a year cost control is the top priority for CFOs and capital expenditure and acquisitions have taken a back seat.

‘Defensive’ balance sheets were also found to be more prevalent among companies conducting 70% or more of their business within the UK.

“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,” said Margaret Ewing, a senior Deloitte partner and former FTSE 100 CFO. “The 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. Expectations of a revival in corporate capital spending and hiring are fading.”

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