NATIONAL and global political/economic risks are the biggest challenges in the minds of CFOs, according to Deloitte.
The Big Four firm’s latest CFO Survey finds the General Election is scored at 63 out of 100 in terms of the level of risk it posed to CFOs’ business. Deflation, and weakness in the Euro area, scored 56. The risk score has increased since CFOs were last questioned three months ago.
Despite the concerns, CFOs were more optimistic about the prospect for growth in the UK and business investment. Earnings are expected to rise by an average of 2.9% in 2015. In last quarter’s survey CFOs showed the highest risk appetite in the research’s history.
Ian Stewart, chief economist at Deloitte, said: “Deflation and weakness in the euro area is a growing concern and is now the second greatest business risk, followed by a UK referendum on EU membership and by emerging market weakness. Again, CFOs believe that the level of threat posed by each has risen over the last three months.
“This marks a big shift in thinking. Going into each year, from 2008 to 2013, CFOs’ main concern was the state of the UK economy. Now the risks are seen as lying elsewhere.”
Seven in ten CFOs expect inflation to sit within the Bank of England target of 1.6% and 2.5% within two years, however one in five expect inflation to fall well below target during that period.
Nine out of ten rate the UK as a ‘good’ or ‘excellent’ place to do business, with a quarter placing it in the top tier of industrialised economies.