Q3 2019 Global CFO Signals™

The shadow of uncertainty grows longer

Uncertainty is taking a toll on CFO optimism in the 20 surveys reporting in this edition of Global CFO Signals.

How does CFO sentiment in Q3 break down?

A synopsis by region:

  • Austria: High anxiety
  • Belgium: Navigating the geopolitical waves and uncertainty
  • Denmark: The great optimism is fading
  • Germany: Agenda 2020: Economy, climate, talent
  • Greece: Most optimistic in Europe
  • Iceland: Growing economic optimism
  • Ireland: The forecast is gloomy
  • Italy: Italian CFOs adapt to the new normal
  • Japan: Trade, taxes, and typhoons
  • Luxembourg: Confidence in the future
  • Middle East: Back to basics
  • Netherlands: Into the woods
  • North America: Trade and economic fears drive sentiment to multiyear lows*
  • Norway: Worried about the future, but still willing to invest
  • Portugal: Keeping course
  • Spain: Pessimism grows in the face of economic slowdown
  • Sweden: The slowdown is here
  • Switzerland: Preparing for stormier weather
  • Turkey: Fully expecting a recession
  • United Kingdom: Persistent uncertainty takes its toll

CFO sentiment in Q3 2019

For CFOs, uncertainty is a constant companion. At times, though, there can be a little too much togetherness.

This seems to be one such period. Despite the continued strength of the US economy and equity markets, CFOs are still facing unknowns that stretch from the resolution of the Brexit negotiations to the US-China trade war to shifting monetary policy. Add in uncertainty about the Chinese economy and renewed concerns about stability in the Middle East, and it is safe to say that few CFOs have a clear line of sight into 2020 and beyond.

What is clear is that uncertainty is taking a toll on CFO optimism in the 20 surveys reporting in this edition of Global CFO Signals. Take sentiment in North America, for example. There, net optimism fell from last quarter’s +9 to -5 this quarter—the first negative reading in nearly seven years. In the Middle East, where 15 countries reported, sentiment also took a negative turn, with net optimism falling from +19 a year ago to -1 now. And in many of the 17 European countries included in this report, CFOs’ confidence in their financial prospects also waned compared with six months ago.

As usual, there are some bright spots. In Greece (net +41), Portugal (+8), Luxembourg (+6), and Denmark (+3), CFO sentiment regarding their companies’ prospects remains positive. Helping this is the fact that revenue expectations are positive in all the European countries reporting, except the UK (net -36 percent).

Still, even for those countries uncertainty can be a burden when it comes to planning—and research has confirmed it. The Bank of England recently released an analysis, based on anonymized data from Deloitte’s UK CFO Survey, that showed that CFOs who report elevated uncertainty are far less likely to prioritize expansionary strategies, such as increasing capital expenditure. And in a speech* drawing on the findings, Michael Saunders, a member of the Bank’s Monetary Policy Committee, noted that whereas previous spikes in uncertainty have been temporary, current uncertainties have become entrenched, with roughly one‑third of UK CFOs reporting high or very high uncertainty for four consecutive quarters, an unprecedented level of persistence.

“Corporate caution has indeed had a dramatic effect on investment, which has slowed sharply since the EU referendum,” says Debapratim De, senior economist, Deloitte UK. “The speech was widely interpreted as making a case for lower interest rates and triggered a decline in market rate expectations.”

In this environment, what is certain is that CFOs in the UK and elsewhere are prioritizing cost control. In nine of the European countries reporting, CFOs ranked cost control as their top strategic priority for the next 12 months, while only two named all growth strategies in their top three. And in the Middle East, cost control now the number one priority, up from sixth in 2018.

While CFOs in North America still indicate a bias toward revenue growth over cost control (51 percent versus 22 percent), a shift toward cost control may be coming—as evidenced by the fact that these CFOs’ expectations for earnings growth hit a new survey low this quarter. Such a turn would not be surprising, says Patricia Buckley, managing director, Economic Policy and Analysis, Deloitte Services LP (US), adding that a major culprit is business concern over the trade war between the US and China. “Complicating matters, of course, is that the US and Chinese views of the future of trade policy may be tied to political uncertainties as we head into 2020.” That, she said, is why “scenario planning is even more important in the current environment.”

Then there is still the overarching uncertainty over the future prospects for the economy. As Deloitte Global’s Chief Economist Ira Kalish put it, “The world increasingly appears to be on recession watch.” And “North American CFOs tend to agree,” says Greg Dickinson, managing director, Deloitte LLP (US), who leads the North American survey, pointing out that several key metrics hit new multi-year and historic (i.e., 38-quarter) lows this quarter. Moreover, CFO expectations for capital spending, earnings, and hiring all declined.

Similarly, in Europe, “the effects of uncertainty are already being felt,” adds Michela Coppola, who heads Deloitte’s European CFO Survey, noting that “it is weakening demand that is currently the main concern for European CFOs.” Little wonder then that “the strategies companies are prioritizing to deal with challenging economic conditions are becoming more defensive, with cost cutting the top priority for CFOs in a majority of countries,” she adds.

Globe of Africa and Europe

Q3 2019 CFO sentiment synopsis by region


Gloom is the prevailing mood in North America. Regarding their companies’ prospects in the first quarter, only 26 percent of CFOs expressed rising optimism (down from 30 percent in Q2 2019), and 31 percent cited declining optimism (up from 21 percent). Their declining optimism is mirrored in their assessments of the North American, European, and Chinese economies. In fact, perceptions of North America fell to a six-year low, with 68 percent of CFOs rating current conditions as good (down from 79 percent last quarter). And this quarter, just 15 percent of CFOs expect better conditions in a year—down from 24 percent in Q3 2019. In keeping with that sentiment, CFOs’ expectations for capital spending and domestic hiring both declined, and earnings hit a new survey low. One bright spot? Revenue expectations increased from 3.8 percent to 4.3 percent.


In the single country reporting from the region, Japan, the outlook remains quite negative. Only nine percent of surveyed CFOs indicated that they were ”more optimistic” about their companies’ financial prospects, down from 10 percent last quarter. But the number of pessimists jumped to 49 percent from 42 percent in Q2 2019—driven by continued concerns over China’s economic slowdown and the US-China trade war.


As reported in the latest European CFO Survey, European companies are far from bullish on their business prospects. In fact, in 13 of the 17 countries reporting in this survey, optimism fell, and in 12, risk appetite retreated from its spring survey levels. Expectations for capital spending in some countries, such as Ireland (net +10 percent, but down 51 percentage points) and Denmark (-15 percent, down 34 percentage points) fell dramatically, and only 10 expect to increase hiring in the next 12 months. Meanwhile, in the UK, where 76 percent of respondents view Brexit as leading to a long-term deterioration of the economy, CFOs identify cost reduction as their top strategy, with a record 58 percent of CFOs rating it as a strong priority, higher even than when the economy was emerging from recession in late 2009.

Middle East

Finally, in the Middle East, net optimism retreated to -1 from +19 last year. In the 15 countries reporting, CFOs’ concerns about economic growth have increased dramatically (86 percent versus 34 percent in 2018), as have their views of geopolitical risks (63 percent versus 20 percent). Oil prices continue to be a factor and pose a more significant risk in 2019 than in 2018.

As they head into the fourth quarter, will any of the major uncertainties plaguing CFOs be resolved? All that is certain, notes Dickinson, “is that other uncertainties will replace them.”

Globe of North and South America

Global CFO Signals: By the numbers

Risk appetite

Along with optimism, CFOs’ risk appetites continued to decline around the world. In Europe, the biggest negative net balances were found in the UK (-87 percent), Germany (-83 percent), and Turkey (-83 percent). The relative “bright” spots included Norway (-35 percent) and Greece (-38 percent), even though risk appetite was negative. In North America, CFOs’ risk appetite has flatlined around 40 percent since late 2018. This quarter, it decreased slightly from 42 percent to 40 percent—the lowest level since this question was first asked in 2015.


Not surprisingly, uncertainty is up in many of the surveys. In Europe, net levels are particularly high in the UK (+96 percent), Germany (+95 percent), and Switzerland (+65 percent). In Denmark, however, 59 percent of CFOs consider the level of uncertainty to be normal, as do 61 percent of Norway’s CFOs. Still, it should be noted that the Bank of England’s recent analysis using Deloitte UK CFO Survey data reveals that, on average, CFOs who report higher levels of uncertainty expect slower growth in investment and hiring.


In Europe, net expectations for revenue growth were particularly strong in Belgium (+79 percent) and Greece (+67 percent), whereas operating margin expectations fell markedly in Austria (-41 percentage points), Spain (-24 percentage points), and Norway (-24 percentage points) from the last survey. Meanwhile, growth expectations in North America increased for revenue (3.8 percent to 4.3 percent), but declined for earnings (6.1 percent to 5.6 percent), a new survey low. In Japan, 39 percent of CFOs expect “large” or “very large” earnings growth, down slightly from 40 percent last quarter.


The outlook on hiring has tempered in many of the countries reporting. In North America, for example, expectations for domestic personnel growth fell from 1.9 percent to 1.6 percent, a three-year low, even though talent remains one of CFOs’ top internal risks. Across Europe, though, hiring intentions remain noticeably negative in the UK (net -66 percent) and Iceland (net -34 percent), whereas Belgium (net +42 percent) and Greece (net +28 percent) remain bullish on adding headcount.

Corporate strategy

In sports, defense often wins games, and CFOs are clearly on the defensive. Nine of the European countries reporting ranked cost control as their top strategic priority for the next 12 months. And in the Middle East, cost management is now the number one priority, up from sixth in 2018. This correlates with the main risk identified by CFOs: the economic outlook and the need to focus their attention on priorities that will address that risk. Still, in North America, CFOs still favor revenue growth over cost reduction (51 percent versus 22 percent), despite strong economic worries.


In an environment of still shifting monetary policy, both bank borrowing and internal financing remain the preferred sources of funding among European CFOs. It is worth noting that their views on corporate debt improved this time, with only Denmark (net -41 percent) rating it as unattractive. In North America, debt financing remains attractive for 87 percent of CFOs (up from 77 percent), but the appeal of equity financing fell for both public and private companies.

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To access previous Global CFO Signals reports, please visit the Global CFO Signals library page.

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