With levels of uncertainty rising and risk appetite declining for CFOs across Europe, those in the UK report the highest perception of uncertainty and the highest levels of concern for revenues, risk and hiring. Deloitte's autumn edition of its European CFO Survey, based on the views of 1,373 CFOs in Europe, found that the general levels of optimism among them have fallen, with twice as many saying they are less optimistic this quarter compared to Q218. Fewer CFOs compared to last quarter are confident their firm will increase revenues in the next 12 months – although CFOs in the eurozone say they are far more optimistic than CFOs in non-euro countries.
The biggest risks cited by CFOs are geopolitical risk, followed by skilled labour shortage and the general economic outlook. But CFOs are still prioritising expansion on their balance sheets, particularly through organic growth. Deloitte's David Sproul commented: “Skills shortages remain a major risk to business in Europe. Our surveys shows that a lack of technical knowledge and work experience are real headaches for business. Companies need to work harder to get and retain staff, tap into underutilised parts of the workforce and investment in productivity-boosting ideas and kit.”
Not a good time for risk
More European CFOs say there is a high level of financial and economic uncertainty (62 per cent, up from 52 per cent in Q2). And overall just one in four CFOs (24 per cent) say now is a good time to take greater risk onto their balance sheets, down from 34 per cent in last spring’s survey. This is the lowest since the European CFO Survey began in 2015. Fewer CFOs are now expecting an increase in capital spending in the next 12 months.
Eurozone CFOs more buoyant
There is a big difference in outlooks between CFOs in eurozone countries and those outside the eurozone. For example, 51 per cent of CFOs in euro area countries plan to increase spending, compared to 23 per cent in non-euro countries. The highest expectations for increasing capex come from Ireland (64 per cent of Irish CFOs), while the lowest are in the UK, with just 11 per cent of British CFOs. And CFOs in the UK perceive the highest levels of uncertainty, with 89 per cent reporting high uncertainty, compared to 14 per cent of CFOs in Sweden. When it comes to hiring new employees, the UK is again the most pessimistic country, with just six per cent of British CFOs expecting to hire more, compared to 59 per cent in Belgium and a European average of 35 per cent.
Deloitte's chief UK economist, Ian Stewart, said: “Geopolitical uncertainties and slowing growth have dented CFO confidence and lowered risk appetite across Europe. Yet CFOs have not turned their back on expansion, and despite a dip, remain pretty positive on hiring and investment.”
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