Press releases

Deloitte European CFO Survey: Business confidence brightens

14 November 2017

  • Confidence strengthens among Europe’s business leaders, with uncertainty decreasing.
  • Outlook improves for revenue growth, hiring and capital spending.
  • Euro area CFOs bolder than non-euro area counterparts.

Business leaders across Europe are more optimistic than they were six months ago and the outlook for revenue growth, hiring and capital spending is improving, according to Deloitte’s latest European CFO Survey.

Deloitte has collated the results of surveys run by its member firms in 19 European countries for the Q3 2017 European CFO Survey, giving the views of 1,546 CFOs.

Optimism and revenue expectations brighten
43% of Europe’s CFOs say they are more optimistic about the prospects for their company than they were three months ago, up from 38% in Q1’s survey. Just 11% say they are less optimistic, down from 13%. Optimism is highest in France, with 78% of CFOs more positive, and lowest in the Netherlands with 23% more optimistic.

46% of CFOs in euro area economies say they are more optimistic, compared to 38% in non-euro countries.

69% of CFOs are confident that their firm will increase revenues over the next 12 months. 73% of CFOs in euro area countries predict revenue growth, compared to 63% in non-euro countries. CFOs in Belgium are the most optimistic about revenues, with 95% predicting growth, while CFOs in Denmark are the least positive, with just 47% expecting growth.

Uncertainties ease
52% of European CFOs say there is a high level of financial and economic uncertainty, down from 61% in Q1. The level of overall uncertainty is its lowest since the launch of the European CFO Survey in Q1 2015.

CFOs in the UK have the highest reading on perceptions of uncertainty, with 85%, while CFOs in Austria had the lowest.

Perceptions of uncertainty are higher in non-euro counties, with 57% reporting high uncertainty, versus 49% in the euro area.

Risk appetite unchanged
33% of European CFOs say now is a good time to take greater risks onto their balance sheets, unchanged from Q1’s survey. Just 14% of CFOs in Turkey are willing to take on greater risk, the lowest across the 19 countries, compared to 63% in Finland, the highest. 36% of CFOs in euro area countries say now is a good time to take on risk, compared to 28% in non-euro countries.

Improving outlook for capex and hiring
42% forecast an increase in capital spending in the next 12 months, up from 40% in Q1. 49% of the CFOs in euro area countries plan to increase spending, versus 31% in non-euro countries. 58% of CFOs in Ireland say they plan to increase capex, the highest, compared to just 22% in the UK.

38% of CFOs say they plan to increase employee numbers in the next 12 months, up from 34% in Q1. 74% of CFOs in Belgium plan to increase job numbers, the highest across the 19 countries, with just 12% of CFOs in the UK set to increase hiring, the lowest. 38% of CFOs in euro area countries plan to increase hiring, compared to 27% in non-euro countries.

CFOs focusing on expansion
Europe’s CFOs are shifting to more expansionary business strategies. Expansionary strategies outnumber defensive measures in 11 of the 19 countries surveyed, compared to eight of 19 in Q1. Similarly a defensive measure is the top corporate priority in only eight countries, down from 11.

CFOs see risks closer to home
CFOs are less concerned about external risks, and are increasingly focused on local factors affecting their operations. A shortage of skilled labour is cited as a top three risk by CFOs in seven countries, up from four in Q1, and labour costs feature for the first time as a top three risk in two countries. Meanwhile, geopolitical uncertainty features among the top three risks in seven countries, down from ten in Q1.

Interest rate rises expected but minimal impact on strategy
57% of Europe’s CFOs say they expect interest rates to rise in their countries over the next 12 months. However, 50% say that any change in interest rates would not lead them to alter their corporate strategies with only small proportions planning measures such as reducing leverage (9%), re-evaluating investment plans (8%) or reducing debt (8%).

Ian Stewart, chief economist at Deloitte, said:
“Buoyed by stronger growth and improving consumer confidence, CFOs across Europe are more optimistic about the outlook for their companies and preparing to increase hiring and spending. This is particularly prominent in euro area countries, with higher levels of optimism, risk appetite and willingness to invest than their counterparts outside the currency bloc.”

David Sproul, senior partner and chief executive, Deloitte North West Europe, said:
“Europe’s CFOs sense a lower level of uncertainty and perceptions of markets are normalising. This is helping CFOs plan for more expansionary strategies and refocus on addressing longer term challenges, with issues such as skills and digitisation moving back up the agenda.”

End

Notes to editors

This is the sixth biannual Deloitte European CFO Survey.

The Survey collates the findings of surveys conducted by Deloitte member firms in Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Norway, Poland, Portugal, Russia, Spain, Sweden, Switzerland, Turkey and the United Kingdom.

In total, 1,546 CFOs took part in these surveys, conducted between August and September 2017.

Percentages used in the report are weighted by GDP to provide accurate comparisons, taking into account individual countries’ GDPs in relation to the total GDP of the 19 participating countries.

The full survey results, including country-by-country breakdowns, and previous surveys are available to view at www.deloitteresearchemea.com

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 deloitte.com/about 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 www.deloitte.co.uk. For more information, please visit www.deloitte.co.uk.

Member of Deloitte Touche Tohmatsu Limited.

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