Accounting group Deloitte has found that nine in ten CFOs believe their business faces a high or very high level of uncertainty.
Deloitte’s latest quarterly survey of chief financial officers took place after the UK foreclosure and warns that only 16% of executives are more optimistic about their business prospects than three months ago.
The first quarter survey assesses the sentiment of more than 100 finance bosses in some of the largest companies in the country, including the FTSE350 companies.
The survey recorded its lowest level of business confidence since its launch in 2007, even lower than during the global financial crisis, in stark contrast to the last quarter of 2019, when the survey recorded confidence at a level record.
Ian Stewart, chief economist at Deloitte, said that the Covid-19 pandemic saw business confidence plummet from a record high after December’s general election in the UK to a historic low in three month.
“CFOs expect the lockdown to ease in May and June and demand in their own industries will begin to recover later this year. But we do not expect a rapid return to activity, with most CFOs assuming that revenues will not return to pre-crisis levels for at least a year, “said Stewart.
Almost all of the executives surveyed expect UK business income to drop over the next 12 months, while executives expect their own business earnings to average 22% less than they had estimated before the pandemic.
The coronavirus crisis has made companies much more risk-averse, with almost all of the managers surveyed (94%) unwilling to take risks on their balance sheets.
As a result, 98% of CFOs expect UK companies to cut capital spending in 2020, and the same percentage anticipates a slowdown in hiring.
Despite government support programs for businesses during the pandemic, financial executives who responded to the survey reported the tightest credit crunch ever, with significantly lower availability and cost of credit. debt in the first quarter.
The economic outlook for the UK is bleak, according to most finance bosses, with more than half (53%) predicting a deep and prolonged slowdown in Britain, which will last until the end of 2020. According to the Office for Budget Responsibility, the independent economic forecaster government, the economy could contract by 13% this year.
To cope with the new economic environment, three quarters of the companies questioned (76%) described cost reduction as a top priority, since more than half of the companies (59%) have employees on leave or (52%) reduced production and closed factories. In addition, 30% of companies have accessed or plan to request the Bank of England’s Covid-19 business financing facility.
Although facing the most demanding challenges for their companies for decades, business leaders are adapting to the new reality, according to Richard Houston, managing director of Northern and Southern Europe at Deloitte, while they look beyond the slowdown.
“Almost all financial executives believe that flexible working will gain ground in the wake of this crisis. We have an opportunity to rethink the future of work in a way that stimulates opportunity and innovation, “said Houston.