Deloitte survey reveals optimism is growing

Business advisory firm Deloitte is expecting to see a growing number of North East businesses expand

Paul Feechan, office senior partner at Deloitte
Paul Feechan, office senior partner at Deloitte

Business advisory firm Deloitte is expecting to see a growing number of North East businesses expand, according to findings from its latest CFO survey.

The firm’s latest quarterly CFO survey, which gauges the views of 135 chief financial officers, including those from 37 FTSE 100 and 45 FTSE 250 companies, has revealed that those deriving more than 70% of their revenues from the UK have become more expansionary than at any time in the last two years.

Deloitte said the findings demonstrate the country is weathering the economic storm, with business optimism rising for the fourth consecutive quarter.

The results show 45% of CFOs believe now is a good time to take risk on to balance sheets, the highest level recorded in the last six years. Credit is also seen as cheaper and more available than at any point within the same time period.

The report states: “The latest survey took part in the second half of June, a period of turbulence in financial markets and one marked by concerns about the withdrawal of quantitative easing in the US and a cash crunch in China.

“Nonetheless CFOs perceptions of macroeconomic and financial uncertainty facing their businesses have fallen to a three-year low.

Paul Feechan, office senior partner at Deloitte in Newcastle, said the sense of optimism is replicated in the region with an increasing number of businesses making steady progress in growing profits and being prepared to invest to expand their offering.

The data is supported by recent findings from the North East Chamber of Commerce’s own survey, which showed North East businesses are growing, recruiting and have more work than at any time since the recession.

Feechan added: “Business optimism has been improving for some time but our latest survey shows that CFOs are translating this confidence into action.

“Rising risk appetite and a shift towards expansion show that large UK corporates are increasingly planning for growth.

“Expansion is back on the agenda for many North East 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.”

The second quarter survey suggests chief financial officers are placing greater emphasis on expansion through introducing new products or services and by acquisition.

They have also softened their focus on cost reduction to the lowest level in two years, with 34% saying reducing costs is a priority for their business, down from 42% in the first quarter of the year.

A net 53% of CFOs see credit as cheap and a net 56% see credit as easily available.

Expectations for hiring and investment are back to the levels last seen in early 2011, when the world economy seemed set fair for recovery, and CFOs also report a continued improvement in their companies’ financing conditions.

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