Repeating a question asked in the “Q2 2015 Survey”, Deloitte asked CFOs whether it was in the interests of UK businesses for Britain to remain a member of the EU.The majority of respondents, 62 per cent, were in favour of the UK remaining in the EU down from 74 per cent in Q2 while 28 per cent said their decision depended on the outcome of prime minister David Cameron’s renegotiation of UK membership. David Sproul, senior partner and chief executive of Deloitte, said: A clear majority of CFOs continue to favour the UK remaining in the EU, but the proportion of those expressing unqualified support has fallen. This mirrors what we have seen from the broader public in opinion polls in the last six months. “With around one third of CFOs undecided on their position or awaiting the outcome of renegotiation discussions, the eventual deal may well significantly affect business attitudes to EU membership. Asked to rate how optimistic they are about the prospects for their company compared to three months ago, 30 per cent of CFOs said they were less optimistic. This is the third consecutive quarter that corporate sentiment has fallen and it is now at its lowest level since 2012. Furthermore, 68 per cent of CFOs said they were optimistic about growth in the UK in 2016, with 82 per cent positive about US expansion. By comparison, CFOs are less confident about prospects for the euro area, with just 25 per cent optimistic about growth in the region. It was also suggested thatCFOs balance sheet strategies are more defensive now than at any time in the past three years. Some 44 per cent of CFOs said cost reduction was a priority the first time in 12 months cost reduction has been the top priority. Meanwhile, 37 per cent said increasing cash flow was a strong priority, with disposing of assets rising from nine per cent to 13 per cent. Ian Stewart, chief economist at Deloitte, said: UK corporate sector risk appetite has fallen to a three and a half year low mirroring the loss aversion and caution being seen in financial markets. With a much sharper focus on cost control and less emphasis on growth through acquisitions and capital spending, CFOs strategies are more defensive than at any time in the past three years. CFOs are most positive about growth in the UK and US in 2016. But despite stronger than expected growth in the euro area in 2015, UK CFOs remain pessimistic about prospects for the region. Levels of confidence about growth in the euro area are lower than for emerging market economies. Doubts about the pace and sustainability of the global recovery are weighing on business sentiment. Confidence fell throughout 2015 and ended the year at its lowest level since Q2 2012, when the euro area was in recession. The surge in business confidence that started in late 2012 went into reverse in 2015. CFOs are reacting to uncertainties abroad by cutting back on risk taking and sharpening their focus on cost reduction. The more defensive stance by CFOs points to a softening in the growth of corporate hiring and capital spending in coming months.
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