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British CFO sentiment hits record low

12 May 2020: Business confidence has plunged to a new quarterly low, trumping the trough reached at the peak of the 2008 financial crisis, according to the latest Deloitte CFO survey.

The Big Four firm’s most recent snapshot reveals a dramatic shift from the upbeat sentiment of the Q4 2019 survey to the unsurprisingly downcast views of the nation’s senior finance leaders today.

A key revelation is that in Q1 2020, some 97% of CFOs now expect their revenues over the next 12 months to be lower than their pre-COVID-19 estimates, with the average turnover figure forecast to slump by 22%. 

Wider economic anxieties meant that in Q1, 94% of those surveyed said they were unwilling to take risk onto their balance sheets – the second-lowest reading for risk appetite on record, the previous low hit during the 2008 financial crisis.

Ian Stewart, chief economist at Deloitte, said: “the COVID-19 pandemic has seen business confidence drop from an all-time high to an all-time low in just three months.

“CFOs expect the lockdown to ease in May and June and demand in their sectors to start recovering later this year.

“But there is no expectation of a quick snap back in activity, with most CFOs assuming revenues will not return to pre-crisis levels for at least a year.”

However, CFOs said they did expect wider economic growth to begin to rise again in the coming months, with 41% anticipating the lockdown to start to ease in May and a further 41% in June. 

76% of respondents thought market appetite for their products and services would return later this year, with Q3 being viewed as the key period of recovery. But most did not expect it to return to pre-COVID-19 levels until 2021, with 53%, believing that peak levels of activity will be only regained from the middle of next year.

With their sights set on the future, CFOs said they expect to see significant increases in pandemic planning, while flexible working was “seen as the big winner”, with 98% expecting it to increase.

CFOs also see the nation-state being playing a bigger role in society as it emerges into a post-pandemic world. 

The 51st Deloitte CFO survey was conducted between 8 and 22 April after the UK officially entered lockdown. In total, 104 CFOs took part, with 23 from the FTSE 100 and 43 from FTSE 250 companies.

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