UK: Deloitte Monday Briefing: CFO Views On 2014

Last Updated: 8 January 2014
Article by Ian Stewart

Most Read Contributor in UK, August 2017

A personal take on economics from Ian Stewart, Deloitte's Chief Economist in the UK.

  • The fourth quarter Deloitte Survey of UK Chief Financial Officers is published this morning. This is the 26th CFO survey and it shows how major UK corporates plan to navigate the risks and opportunities of 2014.
  • 122 CFOs, including 32 at FTSE100 companies, took part in the survey between 22nd November and 9th December. Respondent companies account for 30% of the quoted UK equity market. The full survey report is available at:
  • CFOs enter 2014 in buoyant mood. Business optimism is at a three-and-a-half-year high. Macro uncertainty and capital constraints, two of the big blocks to business activity, have receded.
  • Perceptions of macro uncertainty have fallen sharply in the last year. CFOs now attach a 16% probability to the UK falling back into recession in the next two years, down from 40% a year ago.
  • The financing environment for big corporates is highly favourable. CFOs are more positive about financing their businesses with equities, bonds or bank borrowing than at any time in the last six years. In a sign that the banking system is working, at least for the big corporates in our survey, a record 80% of respondents say that bank credit offers an attractive source of finance. CFOs expect corporates to increase equity and debt issuance this year and to borrow more from the banks.
  • The most striking finding – and we've put the chart on the front of the report to make the point – is that a record 57% of CFOs say that this is a good time to take risk onto their balance sheet. A year ago this stood at 25%. Back in December 2008 the reading was just 1%.
  • The Bank of England and the Treasury will be pleased to see that the top priority for CFOs in 2014 is expansion. Capex is an increasing priority and 88% of CFOs expect M&A activity to increase over the next 12 months.
  • How CFOs run their balance sheets, and in particular, their appetite for expansion, holds the key to corporate investment, hiring and M&A. A year ago the Head of Global Strategy at Standard Life, Andrew Milligan, wrote that one of the signals for turning more positive on risky financial assets would be a shift from defensive to expansionary strategies in the Deloitte CFO Survey.
  • Today's survey shows this has clearly happened (see chart 12 in the report). For the first time in three years, expansionary corporate strategies are clearly in the ascendant.
  • We agree with Standard Life that the key issue is whether greater optimism translates into corporate expansion: the signs from the latest survey are that large corporates are, indeed, planning to expand in 2014.
  • Policymakers will be relieved to see that corporates' plans are falling into line with the official forecasts for the UK economy. The independent Office of Budget Responsibility, for instance, expects growth in business investment to accelerate from 1.9% in 2013 to 6.1% in 2014; exports of goods and services to rise from 1.5% to 4.4% in 2014 and growth in average earnings to accelerate from 1.4% to 2.7%.
  • Overall today's survey bodes well for the stronger, broad based UK recovery policymakers hope to see in 2014.


UK's FTSE 100 ended the week down -0.3%.

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


  • Latvia, which has the highest rate of growth in the EU, became the 18th country to adopt the euro
  • Fiat acquired the remaining 42% stake in Chrysler to take total control of the car maker
  • All 38 UK forecasters surveyed by the UK treasury think that UK growth will be stronger in 2014 than in 2013
  • US house prices have risen by 13.6% in the last year, making the US the world's most buoyant major housing market
  • PIMCO's Total Return Fund, the world's biggest bond fund, lost almost 2.0% of its value in 2013, its worst fall in 20 years
  • Nationwide reported that UK house prices rose 8.5% in the year to December
  • Fees for global investment banking services rose to a 6-year high in 2013 due to a revival in IPOs
  • UK mortgage approvals hit a six-year high in November
  • Yields on 10-year Spanish government bonds fell to a three-and-a-half-year low
  • Emerging market sovereigns and corporates issued $506bn worth of bonds last year, the highest figure on record
  • The number of completed UK residential property transactions rose to its highest level in four years in November
  • The Bank of Japan reported that Japan's economy is staging a 'moderate recovery'
  • A Seattle woman named Beautiful Existence lost weight by restricting her diet in 2013 to food purchased from Starbucks - fast-food diet

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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