European CFO Survey Spring 2020

Plummeting optimism

The forced slow-down of economic activity has added to the already heightened concerns about the European economy. On average, 63 per cent of CFOs report in March 2020 that they are less optimistic about the financial prospects for their company, an increase of almost 30 percentage points in six months, and by far the highest share since the beginning of the series in 2015.

As the health crisis unfolded and more and more countries in Europe implemented increasingly restrictive measures, the share of executives reporting to feel less optimistic increased substantially week after week.

Unavoidable recession

Will this recession drag on, or be short-lived? European companies seem to be preparing for a rather gradual recovery of their business, spread over a longer term:

• Almost 80 per cent of the respondents expect the pandemic to have a negative effect on the revenues of their company well into the autumn 
• one in three expect a double digit decline in the next six months
• longer-term expectations are only slightly more positive: 
  • 10 per cent of the respondents foresee a strong decrease in revenues well into next year 
  • almost 30 per cent think that revenues will be at the same level as forecasted before the outbreak
  • more than half still expect the negative effects of the pandemic to stretch into 2021.
     

The outlook for investments and hiring darkens

Subdued business expectations mean companies are downgrading their investment and hiring plans.

• 41 per cent of CFOs plan to reduce their capital expenditures, twice as many as the 20 per cent who plan to increase them
• 38 per cent of respondents foresee a decrease in the number of their employees over the next 12 months, against 21 per cent expecting an increase.
   

Companies focus on liquidity, working arrangements and communication plans

To steer their companies in these uncharted waters, companies are prioritising short-term reactive measures.

• 74 per cent of CFOs report that they are cutting spending in response to the crisis
• 66 per cent of CFOs are prioritising the setup of alternative working arrangements, while reworking communication plans is the third focus area, prioritised by 35 per cent of businesses 
• During the data collection period, the share of respondents reporting to be prioritising the establishment of new credit lines more than quadrupled – though from a lower base.

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The Deloitte European CFO Survey

About 1,000 CFOs in 18 countries participated, providing an overview of business sentiment and expectations for investments and hiring across Europe, each edition focuses on a topical issue. The Spring 2020 edition asked CFOs about the expected effects of the COVID-19 pandemic on revenues in the short and medium term, as well as the actions taken in reaction. Participating countries were Austria, Belgium, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, Netherlands, Norway, Poland, Portugal, Russia, Spain, Sweden and Switzerland.