A VAST majority of chief financial officers (CFOs) expect Brexit to adversely affect the long-term business environment, according to a new survey.
The latest second-quarter CFO Survey from business group Deloitte shows 83% of CFOs expect the long-term business environment to deteriorate as a result of the UK leaving the EU – the highest reading since the referendum in June 2016.
Meanwhile, the percentage of CFOs who think now is a good time to take a greater risk on to their balance sheets has dropped to 4%, the lowest since the failure of Lehman Brothers in 2008.
Ian Stewart, chief economist at Deloitte, said Brexit was inhibiting corporate spending: “Events in the last three years, and recent news suggesting the economy shrank in the second quarter, have added to worries about the impact of Brexit.
“This is not solely a question of the long-term outlook. Brexit has not happened, but it is acting as a drag on corporate sentiment and spending. Almost two-thirds (62%) of CFOs expect to reduce hiring in the next three years as a result of Brexit and almost half (47%) expect to reduce capital spending, suggesting a cautious approach from businesses.
“Ironically, risk appetite in the corporate sector has slumped just as it has taken off in the equity market.
“Measures of financial market volatility have declined, even though a majority of CFOs rate uncertainty as being at high or very high levels.”
The survey said that while CFOs were battening down the hatches, investor confidence has surged, with the FTSE breaching 7600 in July.
“Equity valuations imply that investors believe central banks will save the day but the downbeat mood of UK CFOs suggests corporates are less sanguine,” said Stewart.
Richard Houston, senior partner and chief executive of Deloitte North and South Europe, added: “Companies are looking for more certainty around our country’s economic future, as they prepare themselves for a post-Brexit environment.”
Why are you making commenting on The National only available to subscribers?
We know there are thousands of National readers who want to debate, argue and go back and forth in the comments section of our stories. We’ve got the most informed readers in Scotland, asking each other the big questions about the future of our country.
Unfortunately, though, these important debates are being spoiled by a vocal minority of trolls who aren’t really interested in the issues, try to derail the conversations, register under fake names, and post vile abuse.
So that’s why we’ve decided to make the ability to comment only available to our paying subscribers. That way, all the trolls who post abuse on our website will have to pay if they want to join the debate – and risk a permanent ban from the account that they subscribe with.
The conversation will go back to what it should be about – people who care passionately about the issues, but disagree constructively on what we should do about them. Let’s get that debate started!
Callum Baird, Editor of The National
Comments: Our rules
We want our comments to be a lively and valuable part of our community - a place where readers can debate and engage with the most important local issues. The ability to comment on our stories is a privilege, not a right, however, and that privilege may be withdrawn if it is abused or misused.
Please report any comments that break our rules.
Read the rules hereLast Updated:
Report this comment Cancel