The latest Deloitte survey of UK Chief Financial Officers, released this morning, shows a fall in business optimism in the wake of the General Election on 8th June.
Despite speculation that the result of the election could mean a closer long term relationship between the UK and the EU, CFO concerns about Brexit have risen.
Brexit continues to top the CFO risk list. 72% of CFOs expect some negative long-term effects on the business environment as a result of the UK's departure from the EU, up from 60% in the first quarter.
CFO perceptions of uncertainty facing business have risen, a development which seems to reflect both the outcome of the General Election and concerns about growth. Worries about UK growth have risen and are now seen as posing a greater risk to business than at any time in two and a half years. Such concerns rank second on CFOs' risk list after Brexit.
For much of the last three years external risks have been the focus of CFO concern. But the worries about geopolitics and growth overseas which dominated CFO concerns in 2015 and 2016 have receded. A recovery in emerging markets and the euro area, and an easing of political risk in the euro area, have pushed emerging markets and the euro area to the bottom of the worry list. Today CFOs see Brexit and the prospect of slower UK growth as being the main risks.
Business sentiment has been on a roller coaster ride in the last 18 months, slumping on the surprise referendum result before staging a strong recovery and then falling back in the wake of the General Election. Many factors have been at work, but Brexit has been a consistent concern. Such concerns eased in the run up to the General Election in the wake of the government's announcement of its broad negotiating aims for Brexit.
Although CFO confidence has taken a knock since the election, sentiment and risk appetite are well above the levels seen last summer. Favourable financial conditions and an improving global backdrop seem to be partially offsetting the effects of domestic uncertainties for UK CFOs.
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