The Deloitte CFO Survey shows that UK CFOs are now more concerned about weak economic growth, as the Brexit transition deal lessens their fears over leaving the EU. The report suggests that corporate uncertainty is at its lowest since the Brexit referendum vote in June 2016 and the transition deal has – possibly – boosted business optimism. The survey ran from 7 to 21 March 2018, with the announcement of the Brexit transition deal coming on 19 March. 84 CFOs responded to the survey before the transition deal was announced and 22 after. The main points in the report, which gathered views from a total of 106 CFOs of FTSE 350 and other large private companies, are:

• weak growth displaces Brexit as top risk facing UK corporates, with concerns about Brexit effects on spending and hiring falling;
• despite equity market weakness and concerns about trade, perceptions of uncertainty are at a two year low;
• cost control remains highest corporate priority, particularly among UK-focused companies;
• one-third of companies report recruitment difficulties or skills shortages;
• 20 per cent of CFOs say they are more optimistic about the prospects for their company than they were three months ago, up from 18 per cent in Q4 2017;
• 14 per cent of CFOs say that now is a good time to be taking risk onto their balance sheets, down from 21 per cent in Q4.

Overall, the report suggests that the Brexit transition deal, announced while the survey was already underway, has helped to reassure businesses. It found that 27% of those who completed the survey after the Brexit transition deal was announced said that they were more optimistic about their financial prospects, compared to 18% responding beforehand. The deal had a similar effect on risk appetite, with 12% of those responding before saying it was a good time to take on risk, compared to 23% afterwards.

Deloitte's Ian Stewart commented: “The Brexit transition deal seems to have had a positive effect on the corporate mood with a clear uptick in optimism and risk appetite between those responding to our survey before and after the news from Brussels. Business confidence has edged up and is running not far off its long term averages. CFOs have shrugged off weakness and volatility in equity markets with perceptions of uncertainty dropping to the lowest levels since spring of 2016, before the EU referendum.”