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Despite risks, CFOs positive on UK economy in 2015

5 January 2015

  • Domestic politics and international economic risks are key concerns for CFOs heading into 2015
  • Optimism and risk appetite dip; perceptions of uncertainty rise
  • UK General Election, Euro area weakness and UK referendum on EU membership top the list of CFO concerns
  • CFOs see end to consumer squeeze and forecast wages in their companies will rise by 2.9% in 2015
  • CFOs say business investment in the UK will rise by 9% - higher than other major industrialised nations

Policy uncertainty at home and economic and geopolitical risks overseas are the central challenges facing chief financial officers (CFOs) of the UK’s largest companies as they enter 2015.

This is according to Deloitte’s latest CFO Survey which gauged the views of 119 CFOs of FTSE 350 and other large private UK companies.

When asked to rate the level of risk posed between 0 and 100, CFOs attached a 63 rating to the General Election and 56 to deflation and weakness in the Euro area and to a possible referendum on the UK’s membership of the EU. The level of risk posed by each factor has risen in the last three months. Further UK-specific concerns – poor productivity, the possibility of a housing bubble and further cuts in spending - ranked as the lowest risks, each scoring 39.

Despite uncertainties, CFOs are upbeat about prospects for UK earnings growth and business investment in 2015. On average, CFOs expect earnings in their businesses to rise by 2.9% in 2015, far faster than CPI inflation which economists expect to increase by 1.3%. 

The proportion of CFOs for whom increasing capital expenditure is a strong priority has risen to a two-year high in Q4. On average CFOs expect their investment in the UK to rise by 9% in 2015, following growth of about 8% in 2014. A 9% rise would put the UK ahead of the major industrialised nations for investment growth in 2015 and see the proportion of UK GDP accounted for by business investment reach the highest level in 15 years. 

Deloitte’s Q4 2014 survey also finds that:

  • Risk appetite among CFOs fell in Q4. 56% of CFOs say that now is a good time to take greater risk onto their balance sheets, down from a record reading of 71% in Q3 2014 but still well above the long-term average
  • 60% of CFOs enter 2015 with above normal, high or very high levels of uncertainty facing their businesses, up from a low of 49% in Q2 2014 but at the same level seen 12 months ago
  • CFOs’ optimism about the prospects for their company has declined to its lowest level in two years. However, the optimists continue to outnumber the number of pessimists
  • 71% of CFOs say inflation will be between 1.6% and 2.5% within two years, in line with the Bank of England’s target. 21% expect inflation to fall well below target, dropping to between 0% and 1.5% in two years
  • 88% of CFOs rate the UK as a “good” or “excellent” place to do business, with a quarter placing it in the top-tier of industrialised economies.

Ian Stewart, chief economist at Deloitte, said:
“The central challenges facing the UK’s largest companies as they enter 2015 are policy uncertainty at home and economic and geopolitical risks overseas. Rising levels of uncertainty have caused a weakening of corporate risk appetite which, nonetheless, remains well above the long-term average.

“Concerns about policy change after May’s General Election have risen significantly and this is seen as the biggest risk facing UK business in 2015.  Deflation and weakness in the euro area is a growing concern and is now the second greatest business risk, followed by a UK referendum on EU membership and by emerging market weakness. Again, CFOs believe that the level of threat posed by each has risen over the last three months. 

“This marks a big shift in thinking. Going into each year, from 2008 to 2013, CFOs’ main concern was the state of the UK economy. Now the risks are seen as lying elsewhere. 

“CFOs expect 2015 to be a year of investment and of recovering real earnings in the UK. Corporate and consumer spending look set to lend the UK economy important support, suggesting the UK will post decent growth through 2015.

“Corporates believe that the long consumer squeeze has ended. On average, CFOs expect wages in their businesses to rise by 2.9% in 2015. With economists expecting inflation of just 1.3% in 2015, real earnings look set to register the first annual increase in eight years in 2015. 

“CFOs are also predicting a buoyant year for business investment, with an average growth of 9% forecast for 2015. Following growth of 8% in 2014, this would put the UK at the top of the league for investment growth in the major industrialised nations and, if realised, will take the share of UK GDP accounted for by business investment to a 15-year high by the end of 2015.

“CFOs are positive on the UK business environment. Most do not think the UK has a particular productivity problem and CFOs overwhelmingly see the UK as a good place to do business.”



About the Deloitte CFO Survey
This is the 30th quarterly survey of Chief Financial Officers and Group Finance Directors of major companies in the UK. 

The Q4 2014 survey took place between 27th November and 15th December. 

119 CFOs participated, including the CFOs of 32 FTSE 100 and 34 FTSE 250 companies. The rest were CFOs of other UK-listed companies, large private companies and UK subsidiaries of major companies listed overseas. The combined market value of the 77 UK-listed companies surveyed is £482 billion, or approximately 23% of the UK quoted equity market.

The Deloitte CFO Survey is the only survey of major corporate users of capital that gauges attitudes to valuations, risk and financing.

For copies of previous CFO Surveys, please visit

About Deloitte
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.

Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see for a detailed description of the legal structure of DTTL and its member firms.

The information contained in this press release is correct at the time of going to press.

Member of Deloitte Touche Tohmatsu Limited

Mark Smith
Deloitte LLP
+44 (0)20 7007 7082  
+44 (0)7590 041 301

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