CFOs fear UK recession and euro break-up
Deloitte CFO Survey shows pessimism for year ahead
CHIEF FINANCIAL OFFICERS believe that the UK will fall back into recession in 2012, according to a wide-ranging survey.
The Deloitte CFO Survey showed that finance chiefs believe the break-up of the euro is the biggest threat to businesses. Respondents said there was a 37% chance on average of one or more countries exiting the euro in 2012. A collapse of the euro would cause another credit crunch and major swings in asset prices and exchange rates, they say.
The CFOs also said that strengthening balance sheets is the overriding focus for 2012, and reducing costs and increasing cash flow are the top priorities.
Ian Stewart, Deloitte chief economist, said: “Against such a backdrop it is no surprise that a return to recession in the UK is, after the euro, the second biggest concern for CFOs in 2012. CFOs are now working on the assumption that Britain will fall back into recession. They see a 54% chance of the UK suffering a ‘double dip’, up from just 27% a year ago.
“The majority of respondents (64%) expect a prolonged period of weakness lasting more than a year. Moreover, financial stress is already affecting big UK corporates, with CFOs reporting the sharpest decline in credit availability since the third quarter of 2008.”
