80% Of CFOs Say UK Businesses Will Be Worse Off Post-Brexit

The report describes an environment where CFOs of businesses across the market-cap spectrum are tightening their plans for spending, recruitment and new product development as they brace for "the hardest of Brexits".

The quarterly survey, which spoke to 110 CFOs in January representing the FTSE 100 and FTSE 250, other listed and large private companies and UK subsidiaries of companies listed overseas, revealed a greater focus on cost reduction than any time in the past nine years.

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Nearly half of CFOs (49%) said capex would slow, compared to the 44% saying the same in the previous quarter's survey.

Ian Stewart, chief economist at Deloitte, said the respondents indicated "defensive balance sheet strategies" from across British business as the still-uncertain nature of the Brexit plan sees them shift adopt cost reduction rather than expansion plans.

He added: "Corporates are positioned for the hardest of Brexits, with risk appetite at recessionary levels and an intense focus on cost control.

"Businesses seem to be increasingly pricing in a worst-case outcome. Anything better, including a delay or a deal, could deliver a Brexit bounce in sentiment."

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Risk appetite is at a nine-year low and expectations of revenue growth are at their lowest since the referendum in 2016.

Deloitte said 56% cited cost control as a strong priority, compared with 53% in Q3, with cash flow second on their list; a priority for 47%, down from 48%.

It added that "expansionary strategies" such as launching new products and services, increased capital expenditure and M&A have fallen out of favour.

David Sproul, senior partner and chief executive of Deloitte North West Europe, said: "This survey shows a definite 'hunkering down' mentality across the UK's CFO community, highlighted by the focus on cost control, a pause on hiring and low appetite for risk.

"Given the ongoing Brexit uncertainty, this attitude is understandable and demonstrates that business urgently needs clarity about the UK's future relationship with the EU.

"Unless a favourable deal is agreed, it seems likely that this current lack of appetite for investment or recruitment will continue."