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Deloitte CFO Survey: Optimism at 18 month high ahead of 2017

29 December 2016

  • Optimism rebounds to an 18 month high but CFOs stay on defensive
  • Risk appetite remains muted and high levels of uncertainty continue
  • Brexit remains CFOs’ top concern

Optimism among the UK’s largest businesses has rebounded to the highest level in 18 months according to Deloitte’s latest CFO Survey.

Despite increased confidence, CFOs will enter 2017 with low levels of risk appetite, high levels of uncertainty and a focus on defensive balance sheet strategies.

119 CFOs of FTSE 350 and other large private companies participated in the Q4 2016 CFO Survey. The combined market capitalisation of the 81 listed companies who participated is £396.3bn. The survey ran from 29th November to 12th December.

Optimism up, but uncertainty high and risk appetite lagging
27% of CFOs say that they are more optimistic about the prospects for their companies, up from 16% in the previous quarter and 3% immediately after the referendum. 22% say they are less optimistic than they were three months ago, making this the quarter the first since Q2 2015 where a net balance of CFOs were more optimistic than not.

Increased optimism comes despite levels of uncertainty remaining above normal. 89% of CFOs say they face high levels of economic and financial uncertainty, up slightly from 88% in the previous quarter but down from 95% in the immediate aftermath of the EU referendum.

Similarly, levels of risk appetite remain muted and well below average, with 80% of CFOs saying now is not a good time to take risks onto their balance sheets, down from 82% in Q3 and 92% after the referendum.

CFOs stay on the defensive
The outlook for hiring and capital expenditure improved in Q4 but, on balance, CFOs see corporate spending decreasing in 2017.

46% say they expect capital spending to decrease in the next 12 months, down from 58% in Q2, while 48% expect hiring to slow, down from 83% in Q2.

Overall, CFOs remain focused on defensive balance sheet measures with 45% saying cost reduction is a strong priority for 2017 and 41% planning to increase cash flow.

Brexit leads business concerns, but negative impact eases
The effects of Brexit remains the top concern for CFOs, on a scale of 0-100 they rate it at 62, up from 57 in Q3. This is followed by weak demand in the UK (55), tightening monetary conditions in the UK and US (53) and weakness in the euro area (52).

Overall, 66% of CFOs believe that the long-term business environment will be worse if the UK leaves the EU - broadly unchanged from 65% in Q3 and 68% in Q2 – while 14% believe the business environment will be better as a result.

Looking at the effects of Brexit on corporate spending, the dampening effect of the decision to leave the EU has eased somewhat since the immediate post referendum low. 35% of CFOs say that their own capital spending will decrease because of Brexit, down from 58% in Q2, 39% say their hiring will slow, down from 66%, and 19% says M&A activity will be weaker, down from 40%.

Ian Stewart, chief economist at Deloitte, said:
“Buoyed by a backdrop of continued UK growth, CFOs have become markedly more positive on the outlook for their businesses and enter 2017 in better spirits than at any time in the last 18 months.

“However, rising optimism does not represent a return to business as usual. Uncertainty in the external environment continues to keep a lid on corporate expansion. Risk appetite remains depressed and is well below average levels and corporates remain on a defensive footing, with cost reduction and building up cash as their top priorities.”

David Sproul, senior partner and chief executive at Deloitte, said:
“2016 has been a tumultuous year but the optimism seen in this survey does give us some confidence heading in to 2017. Uncertainty is the new normal in business life but the challenge for corporates is to gauge and mitigate external risks, while staying open to opportunities."


Notes to editors

About the Deloitte CFO Survey
This is the 38th quarterly survey of Chief Financial Officers and Group Finance Directors of major companies in the UK.

The 2016 Q4 survey took place between 29th November and 12th December.

119 CFOs participated, including the CFOs of 25 FTSE 100 and 43 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 81 UK-listed companies surveyed is £396.3 billion, 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 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.

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