UK: Deloitte Monday Briefing: CFO Survey, Corporates Target Expansion

Last Updated: 1 October 2013
Article by Ian Stewart

Most Read Contributor in UK, August 2017

* The third quarter Deloitte survey of UK Chief Financial Officers is published this morning. A mood of optimism pervades the report. 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

* CFOs see fewer risks in the global economy and greater opportunities for expansion. Optimism has risen for five consecutive quarters and is close to a three year high.

* The defensive strategies of cost cutting and cash accumulation that saw corporates through the global financial crisis are increasingly out of favour. The top priority for CFOs now is expansion.

* CFOs have become more positive on prospects for growth in the developed world and slightly less positive on growth in emerging markets.

* CFOs are increasingly confident that the euro area will hold together and are looking to Europe for expansion. In a reversal of the situation six months ago CFOs believe that UK growth will have a more positive effect on their investment plans in the next year than growth in emerging markets.

* It is symptomatic of the changed attitude that a record 54% of CFOs say that now is a good time to take risk onto their balance sheet.

* CFOs rate credit as being cheaper and more available than at any time in the last six years. Favourable credit conditions and high levels of corporate cash suggest that major corporates have the firepower to invest. The pressure on companies from the institutional investors to do so is mounting. Bank of America/Merrill Lynch's September fund managers' survey found that 54% of investors want companies to cut cash levels and boost capital spending, an eight year high. 

* The last big upswing in CFO confidence, in 2010/11, foundered on the euro crisis. We need to be alive to external shocks which could derail this incipient recovery.

* But what this quarter's CFO Survey reveals is a more confident corporate sector, one which is increasingly focussing on growth.

MARKETS & NEWS

UK's FTSE 100 fell 1.4% last week.

Here are some recent news stories that caught our eye as reflecting key economic themes:

KEY THEMES

* UK Prime Minister David Cameron plans to bring forward the launch of the Help to Buy mortgage scheme from next January to this week to help more people onto the housing ladder
* The UK Chancellor George Osborne gave the Bank of England the power to dilute the effect of the government's Help to Buy housing scheme if there are signs it is creating a housing boom
* Lloyds List, the world's oldest business paper, which has provided shipping news from London since 1734, is abandoning its print version and going fully digital
* Blackberry was sold for $4.7bn to a consortium of Canadian investment companies
* A senior official of the US Federal Reserve said the US economy does not yet have enough momentum to justify slowing the pace of Quantitative Easing
* The Leader of the UK Labour Party, Ed Milliband, said he would reverse a planned Coalition cut in Corporation Tax and would freeze energy prices for 20 months
* UK retailer Tesco entered the tablet market with the launch of its £119 Hudl device
* The number of people entering the UK on investor visas – which allow someone with in excess of £1mn to invest in the UK to remain resident – has risen ten fold since 2008
* BBC economics editor Stephanie Flanders is to join JP Morgan Asset Management as chief market strategist
* The productivity of British workers rose for the first time in 2 years, rising 0.5% in the 3 months to June
* UK consumer confidence rose in September to its highest in almost 6 years
* The UK's Office for National Statistics reported that 53.2% of the UK's £1.8tn stock market is owned by international investors, up from 43.4% in 2010, driven largely by M&A activity
* Eurythmics musician Dave Stewart unveiled plans for a new bank, to be called 'First Artist Bank', which will offer funding as well as "management of digital assets and intellectual property" to musicians
* Former Italian prime minister Silvio Berlusconi pulled his ministers out of the cabinet, triggering a search by Italy's left of centre prime minister for new coalition partners
* A consortium of bidders led by US private equity firm Corsair was selected to take ownership of up to 49% of the 314 Royal Bank of Scotland Branches, with a new "ethical" bank to be created under the old Williams & Glyn's brand
* Japanese Prime Minister Shinzo Abe delivered a speech in which he claimed that "just as Gordon Gekko made a comeback in the financial world...so too can we now say that 'Japan is Back'"
* The UK luxury yacht sector has enjoyed its best year since 2008, with a return to growth of 3.9% in 2012/13
* Census data show that twice as many people in Scotland speak Polish at home as use Gaelic as their main language
* Sales of electricity assisted bicycles, or 'e-bikes', have seen strong growth in Europe this year, rising by 15% in France, whilst sales of traditional bikes fell by 9%
* The fifth installment of the Grand Theft Auto video game made $800m on its first release day and made $1bn of sales in only 3 days
* A 5 month old restaurant run by a 26 year old chef in a converted public toilet in Bermondsey, South London, has been awarded a Michelin star 
* Lincolnshire County Council has halved the number of people who hang up while on hold by replacing traditional hold music with "beige-pop" hits by acts such as Lighthouse Family and Billy Ocean – "got a hold on me"

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