CFOs willing to splash the cash as confidence returns

FINANCE CHIEFS are planning to start spending their company cash piles as confidence in the economy and a willingness to take on returns to UK business.

Growing optimism in the economy is spurring chief financial officers from big business to pursue expansionary strategies with plans to hire more staff and spend more on investments, according to the latest Deloitte CFO survey.

The poll of CFOs from the FTSE 350 found that almost half believe now is a good time to take risk onto their balance sheets – the highest in six years and more than double the level of a year ago.

More emphasis is being placed on expansion through the introduction of new products or services and by acquisition, while the focus on cutting costs has reduced to its lowest level in two years.

In a sign of an improving domestic outlook UK-facing businesses, those deriving more than 70% of their revenues from the UK, have become more expansionary than at any time in the last two years.

“Expansion is back on the agenda for many businesses with expectations for hiring and investment back to levels not seen since early 2011 when the world seemed set for recovery,” said Ian Stewart, chief economist at Deloitte.

“It is particularly encouraging to see the move toward growth among UK-facing companies. These companies have been consistently more defensive than their international facing peers in the last two years. Their shift towards more pro-growth strategies is a sign of an improving UK outlook.”

Overall, CFOs see fewer risks to their business in the economy. Perceptions of uncertainty have dropped sharply: 73% of CFOs believe their businesses face an above normal, high or very high level of external macroeconomic uncertainty, down from a peak of 97% in late 2011.

CFOs rate the chance of a breakup of the euro area at 9%, down from 36% a year ago. Over the same period the probability CFOs assign to the UK experiencing a recession in the next two years has dropped from 47% to 23%.

“In recent years high levels of economic uncertainty have been a major factor holding back business investment. Uncertainty has not died, but it has eased and this bodes well for investment,” Stewart said.


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