CFOs increasingly downbeat as Brexit inches closer - survey

Just 4% of executives questioned by Deloitte for its latest CFO Survey believed now was a good time to take greater risk onto their balance sheets, the lowest since the collapse on Lehman Brothers in 2008, while 83% expected the long-term business environment to deteriorate post Brexit. That was the highest reading since the referendum three years previously.

The survey also found 62% of respondents expected to reduce hiring – the highest level for three years – because of Brexit, while 47% said they expected to reduce capital spending. Another 25% said there were deliberately holding off on mergers and acquisitions.

Ian Stewart, chief economist at Deloitte, said: “Events in the last three years, and recent news suggesting the economy shrank in the second quarter, have added to worries about the impact of Brexit. This is not solely a question of the long-term outlook. Brexit has not happened, but it is acting as a drag on corporate sentiment and spending.”

Just 9% of CFOs said they were more optimistic about the prospects for their company than they were three months ago, compared to 13% in the first quarter.

However, the survey acknowledged that investor confidence was far stronger, with the FTSE 100 briefly breaching 7,600 in early July.

“Equity valuations imply that investors believe central banks will save the day, but the downbeat mood of the UK CFOs suggest corporates are less sanguine,” said Stewart.

Deloitte said 79 CFOs had participated in the latest survey, 48 of which were at FTSE 350 companies. The survey was carried out between 12 and 28 June.

As at 1300 BST, the FTSE 100 was largely flat at 7,551.