The second quarter's Deloitte CFO Survey, published on 9th July 2013, shows a sharp rise in risk appetite at the top end of the corporate sector and a shift towards expansionary strategies. The key findings from the survey are:
A reduction in uncertainty: Despite recent turbulence in financial markets CFOs' perceptions of external macro and financial risk have continued to decline. In particular, CFOs are much less concerned about the risk of a breakup of the euro area. This shift is significant because earlier CFO Surveys show that elevated perceptions of macro and financial uncertainty have been a major factor in holding back investment.
An Availability of capital: The financing environment for corporates has continued to improve. CFOs say that credit is cheaper and more available that at any time in the last six years. Big corporates appear to be relatively unconstrained by shortages of capital.
Openness to risk: CFOs' willingness to take risk onto their balance sheet has risen to the highest level in six years. This improvement, if sustained, seems consistent with a revival in corporate activity that would support stronger, and better balanced growth.
A focus on growth: Corporates are shifting away from the crisis-era focus on cost control and deleveraging. CFOs are now edging towards more expansionary policies and our index of corporate expansion has risen to an 18 month high. In a sign of an improving domestic outlook, the shift to more pro-growth strategies has been driven by companies which earn the majority of their revenues in the UK.
Corporate sentiment is changeable, responding to ebb and flow of news and shifts in financial markets. Uncertainty has not died, but it has declined. Rising risk appetite and a shift towards expansion show that large UK corporates are increasingly planning for growth.
The full survey report is available at: http://www.deloitte.com/view/en_GB/uk/research-and-intelligence/deloitte-research-uk/the-deloitte-cfo-survey/index.htm
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