Tuesday 8th April, 2014

According to the latest Deloitte CFO Survey for the first quarter 2014, greater confidence about growth in the UK and euro area is supporting corporate investment.

The survey gauged the views of 126 CFOs, including 27 FTSE 100 and 45 FTSE 250 companies.

A net 95% of CFOs said that prospects for economic activity in the UK have improved over the last six months, 70% said that the outlook in the USA has improved and 54% believed the euro area has improved.

CFOs have become markedly more confident on the UK inflation outlook. 76% of CFOs expect CPI inflation to be running at 1.5%-2.5% in two years; time, in line with the Bank of England’s 2.0% target.

The survey also highlighted CFOs’ appetite for risk has risen for the seventh consecutive quarter and is now at its highest level for six-and-a-half years. 71% of CFOs say now is a good time to take greater risk onto their balance sheets, one of the largest quarter-on-quarter rises on record and double the level of a year ago.

Ian Stewart, chief economist at Deloitte, said:

"The default position of large corporates in the past six years - bullish on emerging markets, cautious on developed markets - seems to be reversing. CFOs are now more confident about growth in developed economies, particularly the UK. CFOs increasingly see growth here in the UK, and established markets such as the US and euro area, as the key drivers of their corporate investment plans."

"CFOs foresee an increase in capital raising over the next year. Expectations for equity issuance and bank borrowing have risen sharply in the last year. Easy monetary policy and favourable financing conditions have created a capital-rich environment for big UK corporates. CFOs are likely to draw down on that capital over the next year to fund expansion."