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CFOs trim spending amid plans over election concerns

BRITAIN’S largest companies are more likely to curtail their spending plans over the next 12 months amid concerns over the outcome of May’s General Election, a survey of the finance chiefs has found.

According to the latest poll of CFO sentiment by accountants Deloitte, expectations for capital expenditure, while still positive, have dipped as fears over post-election policy changes have weighed on corporate expansion plans.

The survey of 108 CFOs of FTSE 350 and other large private UK companies found that 53% of CFOs said UK corporates will increase spending in the next 12 months, down from a high of 80% in the same period last year.

Against the backdrop of elevated levels of political uncertainty, CFOs have become less willing to take risk onto their balance sheets. Uncertainty has risen with 63% of CFOs saying the level of uncertainty facing their business is at the highest level in almost two years.

The majority of finance chiefs feared that changes to general levels of regulation are likely to be negative and half (50%) said that changes to tax policy are likely to be negative. CFOs also said that changes to financial regulation, fiscal policy, monetary policy, the labour market and energy policy are likely to be negative.

Ian Stewart, chief economist at Deloitte, said: “Rising perceptions of uncertainty have dampened corporate risk appetite and fed through to a softening of investment intentions. Risk appetite appears to have decoupled from its usual drivers, the economic outlook and equity market performance. This provides an ominous reminder that the business recovery is not assured.

“A clear majority of CFOs see the potential for adverse changes on regulation and taxation and, on balance, the expectation is that post-election changes will be negative for fiscal, monetary and labour market policies.”

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