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UK company finance chiefs upbeat, Deloitte survey shows

Appetite for business risk damaged by Brexit confusion

British company finance chiefs are their most optimistic in 18 months, but their risk appetite has recovered far less from the battering it took in the run-up to and aftermath of last year’s vote to leave the European Union, a survey recently found.

Britain’s economy enjoyed the second-fastest growth of any large advanced economy last year, but with consumer demand fading in the face of surging inflation, the Bank of England hopes business investment will keep growth going this year.

Accountants Deloitte said the mood among chief financial officers who decide investment plans at some of Britain's biggest companies was the most upbeat since June 2015.

Some 31 per cent of chief financial officers surveyed last month said they were more optimistic about the prospects for their company than three months earlier, up from 27 per cent in December and just 3 per cent immediately after the June 2016 referendum.

“The UK corporate sector enters the negotiation phase of Brexit in far better spirits than seemed likely in the months after last year’s referendum vote,” David Sproul, a senior partner at Deloitte, said.

Corporate sentiment

However, while business optimism is pretty much back to its level before the EU referendum started to weigh on corporate sentiment, risk appetite is far from having recovered.

Some 26 per cent of chief financial officers said they still expected to reduce capital spending because of Brexit and 30 per cent plan to slow hiring – though this is down from an outright majority who planned to cut investment and jobs just after the referendum.

Just 26 per cent of chief financial officers think now is a good time to take a risk – up from 3 per cent after the referendum, but far below the 51 per cent who were prepared to add risk to their company’s balance sheet in June 2015.

Last month, prime minister Theresa May formally told the EU that she wanted to start two years of exit talks.

“Businesses will hope that the UK can secure the best possible deal on trade and market access, but must continue to plan for an exit in 2019, several years of trade negotiations, and a transitional phase to bridge the two,” Mr Sproul said.

The Deloitte survey was conducted between March 8th and March 22th and was based on responses from 130 chief financial officers, including 25 of Britain’s 100 largest listed companies, and 53 mid-cap firms. Other participants included finance directors of large, privately held companies and British subsidiaries of foreign firms.