Press releases

Deloitte CFO Survey: Transition deal boosts sentiment

6 April 2018

  • Weak growth displaces Brexit as top risk facing UK corporates, with concerns about Brexit effects on spending and hiring falling
  • Despite equity market weakness and concerns about trade, perceptions of uncertainty are at a two year low 
  • Cost control remains highest corporate priority, particularly among UK-focused companies
  • One-third of companies report recruitment difficulties or skills shortages

Corporate uncertainty is at a two-year low and the Brexit transition deal has boosted business optimism according to Deloitte’s latest CFO Survey.

Concerns about the effects of leaving the EU on hiring and spending continue to fall and weak UK growth has replaced Brexit as the biggest risk businesses face. 106 CFOs of FTSE 350 and other large private companies participated in the Q1 2018 CFO Survey. The combined market capitalisation of the 78 UK-listed companies who participated is £427bn, approximately 17% of the UK quoted equity market.

The survey ran from 7 to 21 March 2018, with the announcement of the Brexit transition deal coming on 19 March. 84 CFOs responded to the survey before the transition deal was announced and 22 after.

Optimism edges upwards but risk appetite weakens
Overall, 20% of CFOs say they are more optimistic about the prospects for their company than they were three months ago, up from 18% in Q4 2017. 14% of CFOs say that now is a good time to be taking risk onto their balance sheets, down from 21% in Q4.

Brexit transition deal boosts business optimism
27% of those who completed the survey after the Brexit transition deal was announced said that they were more optimistic about their financial prospects, compared to 18% responding beforehand. The deal had a similar effect on risk appetite, with 12% of those responding before saying it was a good time to take on risk, compared to 23% afterwards.

Uncertainty at a two-year low
CFOs’ perceptions of uncertainty have fallen, with 31% saying there is a high or very high level of financial and economic uncertainty facing their business, down from 38% in Q4. Uncertainty is at a two year low and the lowest since the build up to the EU referendum (29% in Q1 2016).

Brexit effects softening
CFOs are becoming less pessimistic about the effects of Brexit on their spending and hiring decisions. 25% say they expect their capital expenditure to shrink as a result of Brexit, down from 39% in Q4, while 30% say they expect hiring to slow, down from 41% on the quarter.

Weak UK demand displaces Brexit as biggest risk
For the first time since the EU referendum, Brexit is not the biggest risk CFOs say their businesses face. Rating risks on a scale of 0 to 100, CFOs assign a rating of 57 to weak demand in the UK (down from 59 in Q4) with the effects of Brexit scored at 56 (down from 62 in Q4).

Brexit is followed by the prospect of higher interest rates and tighter monetary conditions in the UK and US (51), poor UK productivity (48) and policy uncertainty in the US and the risk of greater protectionism (47). Weakness and volatility in emerging markets (43) and weakness and deflation in the euro area (37) were the lowest-ranked risks.

Internationally-focused companies more optimistic
Internationally-focused companies, who derive more than 70% of their revenues abroad, show a clear focus on expansion, with moving into new markets their top priority. However, those businesses deriving revenues largely from the UK are operating more defensively, with cost control as their number one priority.

Cost control remains top priority
Cost control remains the main focus for CFOs over the coming 12 months, with 42% citing it as a strong priority, down from 51% in Q4. Introducing new products and services or expanding into new markets, ranks as the second highest priority, with 40% of CFOs citing this as a focus.

CFOs speed up interest rate expectations
47% of CFOs say they expect the Bank of England’s base rate to be at or above 1% within a year’s time, and 49% expect the rate to be at 0.75%. Just 4% expecting it to remain unchanged at 0.5%, down from 15% in Q4.

One-third of businesses face skills challenges
31% of CFOs say their companies have experienced recruitment difficulties or skills shortages over the past three months, with 69% saying there has been no change and none saying that filling roles has become easier.

Ian Stewart, chief economist at Deloitte, said:
“The Brexit transition deal seems to have had a positive effect on the corporate mood with a clear uptick in optimism and risk appetite between those responding to our survey before and after the news from Brussels.

“Business confidence has edged up and is running not far off its long term averages. CFOs’ have shrugged off weakness and volatility in equity markets with perceptions of uncertainty dropping to the lowest levels since spring of 2016, before the EU referendum.

“We see a clear divide in the balance sheet strategies of CFOs in companies focused on the UK and those focused internationally. Those CFOs in businesses with major international revenues report a clear focus on expansion, capital spending and moving into new markets. However, their UK-focused counterparts are operating more defensively, prioritising cost control and cash conservation.”

David Sproul, senior partner and chief executive of Deloitte North West Europe, said:
“Brexit remains a major concern for UK CFOs, though one which, in the wake of the announcement of the transition deal, is easing. Concerns about the dampening effect on corporate spending plans remain, but they have softened. Importantly, for the first time in two years, Brexit is not the biggest risk CFOs say they face. Weak UK demand is cited as the top concern, though there is likely to be a relationship between the two.

“The effect of the transition announcement on this quarter’s survey results underscores the sensitivity of sentiment to developments in the Brexit negotiations. The moment of truth on Brexit is approaching. The UK government hopes to strike a deal with the EU and have it endorsed by Parliament this year. Whether it succeeds in doing so seems likely to be a major driver of business confidence through the rest of this year.”


Notes to editors

About the Deloitte CFO Survey
This is the 43rd quarterly survey of Chief Financial Officers and Group Finance Directors of major companies in the UK.

The 2018 Q1 survey took place between 7th and 21st March 2017.

106 CFOs participated, including 24 FTSE 100 companies and 42 FTSE 250 companies. 84 CFOs responded to the survey before the transition deal was announced on 19th March and 22 after.

The combined market value of the 78 UK-listed companies surveyed is £427bn, or approximately 17% 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 one or more of Deloitte Touche Tohmatsu Limited (“DTTL”) a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see for a detailed description of the legal structure of DTTL and its member firms.

Deloitte LLP is a subsidiary of Deloitte NWE LLP, which is a member firm of DTTL, and is among the UK's leading professional services firms.

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

For more information, please visit

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