Brexit, cost control on the minds of UK CFOs


Increasing concern regarding the risks posed by Brexit is one of several domestic factors that have caused the UK’s finance chiefs to re-evaluate their priorities going into 2018, Deloitte’s Q4 CFO survey suggests.

The UK’s decision to leave the EU was deemed the biggest cause for concern by the CFOs of large companies. They ranked their concern 62 on a scale of 0–100, up from a score of 58 in the previous quarter. Seventy-three per cent of CFOs said they expect the overall business environment to be worse post-Brexit.

Worries about weak demand in the UK also moved up the scale to 59, from 53 last quarter. Poor national productivity scored 49, rising from 43.

Respondents’ also perceive greater uncertainty. Thirty-eight per cent described the level of uncertainty facing their business as high or very high. In the third quarter, this was slightly lower at 35%, but has not reached the 50% reported by leaders one year ago in the wake of the EU referendum.

Plans for 2018

Against this backdrop, 42% of respondents expect to see capital expenditure decrease somewhat or significantly over the next 12 months. Hiring was expected to decrease somewhat or significantly in the next year by 51% of those polled.

Reducing costs is a strong priority for 51% and somewhat of a priority for a further 38% of respondents.

However, CFOs are still looking to expand and are keen to identify opportunities for growth. Expansion by acquisition was a strong priority for 21% over the next year and somewhat of a priority for 33%. Organic expansion was among the priorities of 98% of those polled.

Researchers gathered the opinions of 112 CFOs from FTSE 350 and other large private companies between 3 December and 15 December. This is the 42nd edition of the quarterly survey.

“The priority CFOs attach to expansion over the next 12 months, whether organically, through acquisitions, introducing new products and services, or moving into new markets, is at its highest level since 2009,” David Sproul, senior partner and chief executive of Deloitte North West Europe, said in a news release.

“It seems that an accelerating global economy is helping to counter the effects of uncertainty close to home. … The central challenge for UK business over the next 12 months will be achieving growth in an environment of stringent cost control,” Sproul added.

That sentiment is starkly different from the optimism expressed by CFOs of large North American companies. In another Deloitte survey, those finance chiefs were generally optimistic, with more focus on revenue growth than cost containment.

Other UK survey findings

An increase in the UK interest rate is expected by the majority of respondents. Eighty-five per cent expect the rate set by the Bank of England to reach or exceed 0.75% by the beginning of 2019.

The majority of finance chiefs (54%) expected an increase in M&A activity in the UK in 2018.

Samantha White ( is an FM magazine senior editor.