Posted: 16 Oct. 2017 5 min. read

Deloitte CFO Survey Q3 2017 - Optimism bounces

A personal view from Ian Stewart, Deloitte's Chief Economist in the UK. 

The latest Deloitte survey of UK Chief Financial Officers, released this morning, shows a rebound in optimism after the sharp decline in the wake of June's General Election. Perceptions of uncertainty have declined and are running at almost half the levels prevailing after last year’s EU referendum.

Concerns over Brexit have eased, with 60% of CFOs expecting the UK’s exit from the EU to lead to affect the business environment adversely, down from 72% in June. Nonetheless, Brexit tops the CFO risk list and almost a third of CFOs expect it to reduce their investment in the next three years.

CFOs rate weak UK demand the second greatest risk, with prospects for higher interest rates in third place. In the light of recent hawkish comments from the Bank of England Governor, Mark Carney, CFOs have brought forward expectations for a UK rate rise and 92% expect base rates to be higher than their current 0.25% level in a year’s time.

UK inflation has surged in the last 2 years, from close to zero to approaching 3.0%. Surging inflation has put pressure on profit margins with CFOs report that cost pressures are running at the highest level in more than six years. While optimism and expectations for revenues have recovered from last year’s lows, profit expectations continue to languish.

UK businesses are rather more upbeat today than three months ago and see fewer risks in the world. Nonetheless, perceptions of uncertainty are elevated and Brexit remains a major worry. With margins under pressure CFOs are operating cautiously. It is a testament to the changeable business environment that eight years into the recovery cost control is the top balance sheet priority for major UK corporates.

To read the full report and download the survey data please click on the link below:

Key contact

Ian Stewart

Ian Stewart

Partner and Chief UK Economist

Ian Stewart is a Partner and Chief Economist at Deloitte where he advises Boards and companies on macroeconomics. Ian devised the Deloitte Survey of Chief Financial Officers and writes a popular weekly economics blog, the Monday Briefing. His previous roles include Chief Economist for Europe at Merrill Lynch, Head of Economics in the Conservative Research Department and Special Adviser to the Secretary of State for Work and Pensions. Ian was educated at the London School of Economics.