CFOs enter spend mode as risk appetite increases

CFOs are looking to take more risk onto their balance sheets, as optimism and appetite to grow hit the highest levels in several years.

Seven in ten of the senior CFOs interviewed by Deloitte said it was a good time to take greater risk onto their balance sheet. A net 80% of CFOs expect cap-ex to increase in the next 12 months, while 36% predict a rise in discretionary spending: the highest levels in three and a half years.

Only 2% believe their balance sheet is over-leveraged, compared to a peak of 63% in 2009. More than a third (37%) believe their company is under-leveraged. A record 95% expect M&A activity to increase during the 12-month period.

Ian Stewart, chief economist at Deloitte, said: “The default position of large corporates in the past six years – bullish on emerging markets, cautious on developed markets – seems to be reversing.

“CFOs are now more confident about growth in developed economies, particularly the UK. CFOs increasingly see growth here in the UK, and established markets such as the US and euro area, as the key drivers of their corporate investment plans. 

“Easy monetary policy and favourable financing conditions have created a capital-rich environment for big UK corporates. CFOs are likely to draw down on that capital over the next year to fund expansion.”