Business optimism slumps, according to expert survey

Business optimism among senior finance chiefs has fallen to its lowest level on record in the wake of Brexit, according to a survey by Deloitte.

The figures, the worst since Deloitte’s survey began in 2007, show that 73 per cent of chief financial officers are less optimistic about the prospects for their company following the referendum result, up from 32 per cent in the first quarter of the year.

Key findings

  • Uncertainty soars while optimism, risk appetite and revenue expectations drop sharply
  • CFOs shift to defensive strategies, predicting slowdowns in hiring and capital spending
  • Business calls for clarity on EU negotiations and support for banking system.

David Sproul, senior partner and chief executive of Deloitte, said: “The outcome of the EU referendum has triggered a sharp, negative response from the corporate sector. This survey was conducted immediately after the referendum, against a backdrop of historical political upheaval and financial uncertainty.

“The faster-than-expected appointment of a new prime minister removes one source of uncertainty, now the government must set out its vision for the UK’s future relationship with the EU to provide further stability and reassurance.”

The survey also revealed that 83 per cent of CFOs expect a slowdown in hiring over the next year, the highest number recorded and up significantly from 29 per cent in the first quarter.

Ian Stewart, chief economist at Deloitte, said: “CFOs do not seem to be waiting for growth to slow before adjusting direction. There has been a marked shift to more defensive balance sheet strategies in the wake of the referendum, with a focus on reducing costs, building up cash flow and caution on all forms of spending.

“Corporate willingness to take risk has seen one its largest ever declines while the outlook for capital spending, hiring and discretionary spending is at levels last seen just before the so-called ‘double-dip’ slowdown of 2012.”

SME Publications/ SME XPO 2024
SME Publications/ SME XPO 2024