By Claire West

The decline in business optimism seen in the first quarter from the Deloitte CFO Survey has accelerated with CFO sentiment falling at the fastest rate since the failure of Lehman Brothers in September 2008.

The CFO optimism measure has dropped to its lowest level since 2009, a time when the UK economy was in recession. Confidence that the recovery can be sustained has also taken a knock. On average CFOs see a 33% chance of a double dip.

This mood of caution is reflected in a shift in balance sheet strategies employed by CFOs. They are putting more emphasis on cost control and increasing cash flow than at any time in the last year. There is also a growing belief that the upswing in corporate revenues is likely to slow over the next 12 months. A year ago, the dominant view among CFOs was that profit margins were heading higher. Today, the balance of opinion is that margins are set to narrow. CFOs believe that the period of strong growth in profit margins is drawing to an end.

While CFOs have become more cautious, they remain willing to take greater risk. High levels of risk appetite seem to reflect three main factors: the strength of corporate balance sheets, the availability of capital at a relatively low cost and a perception that, while uncertainties abound, the current environment also presents opportunities for profitable growth.

Consistent with high levels of risk appetite, CFOs say their top priority remains the introduction of new products/services or expansion into new markets. Expanding by acquisition and raising capital expenditure also remain prominent priorities. Our measure of balance sheet strategies shows a bias in favour of expansion, albeit less than that in the last two quarters.

These results hide a significant distinction between the priorities of individual CFOs. The Deloitte CFO Survey panel is made up of large corporates, many of them with extensive international exposure. On average, companies which responded to the second quarter survey receive about half their revenues from the UK and half from overseas.

The analysis shows that more overseas exposed companies have higher levels of risk appetite and are pursuing more expansionary strategies than their UK-facing counterparts.


CFO optimism has fallen sharply. Yet strong corporate balance sheets and good financing conditions mean that many CFOs are continuing to look for opportunities for expansion. This quarter’s survey suggests that CFOs see many of those opportunities lying overseas

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