CFOs rank Brexit as top risk for businesses - Deloitte

UK company finance chiefs have been forced to adopt their most defensive strategy stance in nine years due to the risk Brexit poses to business, a new survey from Deloitte has revealed.

The latest quarterly survey of chief financial officers from Deloitte revealed that Brexit is leading a market shift towards a dependance on the outcome of the exit from the European Union and CFOs are cutting capital expenditure and hiring at levels not seen in almost a decade.

The survey also found that funding conditions have tightened and the cost of credit had risen to its highest level in six years and the proportion of CFOs finding easy credit fell in the past quarter to its lowest point in the past two years

The 100 CFOs questioned also said they remain pessimistic about the long-term effects of Brexit with around 80% believing it will lead to deterioration in the business environment and ranking it the top threat to their firms.

Other risks include US protectionism and weak demand in the UK but domestic risks are the dominant concern. CFOs rate emerging market and euro area weakness among the bottom three risks to their business.

Ian Stewart, chief economist at Deloitte said: “Corporates are positioned for the hardest of Brexits, with risk appetite at recessionary levels and an intense focus on cost control. Businesses seem to be increasingly pricing in a worst-case outcome. Anything better, including a delay or a deal, could deliver a Brexit bounce in sentiment.”

David Sproul, senior partner and chief executive of Deloitte North West Europe said: “This survey shows a definite ‘hunkering down’ mentality across the UK’s CFO community, highlighted by the focus on cost control, a pause on hiring and low appetite for risk.

“Given the ongoing Brexit uncertainty, this attitude is understandable and demonstrates that business urgently needs clarity about the UK’s future relationship with the EU. Unless a favourable deal is agreed, it seems likely that this current lack of appetite for investment or recruitment will continue.”