Chief financial officers (CFO) across Europe are reporting a rise in levels of uncertainty and a declining risk appetite, but are adopting expansionary plans, with those based in Ireland the most committed to future capital expenditure, according to research from Deloitte
The firm’s latest European CFO Survey, based on the views of 1,373 CFOs in 20 European countries, found that only 25% are more optimistic about the financial prospects for their company than they were three months ago, down from 38% in the spring 2018 survey.
A quarter (26%) say they are less optimistic, more than double from the previous survey (12%).
There has also been an increase overall in the proportion reporting a high level of financial and economic uncertainty, which now stands at 62%, up from 52% in spring 2018.
CFOs in the UK have the highest reading on perceptions of uncertainty, with 89% reporting high uncertainty, while CFOs in Sweden had the lowest with 14%.
Just one in four CFOs (24%) say now is a good time to take greater risk onto their balance sheets, down from 34% in last spring’s survey, and the lowest since the survey began in 2015.
Overall, 39% forecast an increase in capital spending in the next 12 months, down slightly from 46%.
Two thirds (64%) of CFOs in Ireland say they plan to increase capex, the highest across the 20 countries, compared to a low of 11% in the UK.
Concerns about geopolitical risks have overtaken the shortage of skilled labour, with CFOs in half of the countries surveyed rating it as the biggest risk, up from one quarter of those surveyed six months ago.
CFOs are also becoming increasingly concerned about the general economic outlook, with 45% of those countries surveyed saying this was their biggest risk (up from 30%). The same percentage cite a skills shortage as a significant business risk.
In 13 of the 20 countries surveyed, CFOs cite more expansionary balance sheet measures as priorities rather than defensive measures, with organic growth the main expansionary focus. This is up from the previous survey when CFOs in 11 of 20 countries were prioritising expansion.
David Sproul, senior partner and chief executive, Deloitte north west Europe, said: ‘Despite higher levels of uncertainty European CFOs are focusing on their expansionary strategies and creating new products to keep pace with technological change.
‘Skills shortages remain a major risk to business in Europe. Our survey shows that a lack of technical knowledge and work experience are real headaches for business. Companies need to work harder to get and retain staff, tap into underutilised parts of the workforce and investment in productivity-boosting ideas and kit.’
Report by Pat Sweet
