The latest Deloitte survey of UK Chief Financial Officers, released this morning, reveals that three months on from the EU referendum Brexit risks continue to loom large for the UK's largest corporates.

The period since the previous CFO Survey, carried out in the immediate aftermath of the referendum vote, has seen Mrs May's appointment as Conservative Party leader, a strong rally in equity markets and a run of solid UK and global economic data.

Yet despite some improvement CFOs continue to see significant risks in the economic environment and perceptions of uncertainty remain elevated.

Levels of concern about macro risk has risen across five of the six areas where we regularly poll CFOs. Brexit tops the risk list while concerns about UK growth and competitiveness have soared in the last six months. The one category of risk where concerns have declined, albeit marginally, is emerging markets and geopolitics.

Brexit concerns are weighing on corporate risk appetite, with 18% of CFOs saying that now is a good time to take risk onto their balance sheet, up from a seven year low of 8% immediately after the referendum. CFOs expect their investment spending and hiring to be weaker over the next three years as a result of Brexit. And most expect spending in these areas to decline over the next 12 months.

This caution is reflected in the way in which corporates plan to run their balance sheets with cost reduction and building up cash ranking as the top two priorities. 

Views on the long-term effects of Brexit remain largely unchanged from three months ago. Roughly two-thirds of CFOs think Brexit will lead to a deterioration in the business environment in the UK while one-third believe it will have no effect or will improve the business environment.  

The CFO Survey paints a more downbeat picture of the UK economy than much of the other recent data. The Purchasing Managers surveys, for instance, have shown a marked, and stronger than expected, bounce in activity in construction, manufacturing and services since the referendum. But the data have not been uniformly strong and last week's sell-off in sterling against the dollar testifies to market anxieties about the eventual Brexit settlement.  

Three months on from the UK referendum the allocators of capital in the UK's largest business remain cautious and focussed on the risks generated by Brexit.

To read the full report and download our dataset please click on the link below -

http://www2.deloitte.com/uk/en/pages/finance/articles/deloitte-cfo-survey.html

PS - Last week's Conservative Party conference provided evidence of what last week's Monday Briefing called the "quiet return of Mr Keynes" – the shift, by Western governments, from relying on monetary policy to boost growth to using Keynsian-style fiscal policies. In her closing address to the conference the Prime Minister cast doubt on the benefits of monetary easing which, she said, had had, "some bad effects". The Chancellor, Phillip Hammond, has abandoned his predecessor's target for eliminating the public sector deficit by 2020 and said that there is a case for some extra spending on public sector infrastructure. In the Autumn Statement, on 23rd November, Mr Hammond will map out his vision for public spending. A big splurge in spending is not on the cards, but more public borrowing to finance infrastructure and housing investment seems quite likely.

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