CFOs of large businesses in the UK are feeling bullish about expansion, with nearly half (45%) saying that now is a good time to take risk on to the balance sheet.
According to a survey by Deloitte, CFOs’ risk appetite is at its highest level in six years. They favour expansion through the launch of new products and services as well as by acquisition.
Meanwhile, CFOs are also less focused on cost reduction than they were in the first quarter of this year, with 34% saying that making savings is a priority for their businesses, down from 42% in Q1 2013.
CFOs’ willingness to take risks may be influenced by the fact that they view credit as being cheaper and more available than at any time in the past six years. They also see fewer risks to their businesses in the economy. While three-quarters (73%) of CFOs believe their businesses face an above-normal, high or very high level of external macroeconomic uncertainty, this is still down from a peak of 97% in late 2011.
In addition, CFOs are more confident about the eurozone’s survival, with 9% predicting a break-up (down from 36% a year ago). Over the same period, CFOs have become more confident about the UK economy, with less than a quarter (23%) expecting a recession in the next two years, down from 47%.
But 85% of CFOs think that loose monetary policy is likely to lead to inflation running significantly above 2% for a prolonged period.
Commenting on the results, Ian Stewart, chief economist at Deloitte, said: “Expansion is back on the agenda for many businesses with expectations for hiring and investment back to levels not seen since early 2011 when the world seemed set for recovery. CFOs’ willingness to take risk on to their balance sheets has risen to the highest level we have ever recorded. The recession-era focus on cost-cutting and debt reduction is easing.”
Sally Percy is editor of The Treasurer