Risk appetite among the chief financial officers of the UK’s largest companies has surged to the highest level in seven years, despite economic and financial uncertainties.
Deloitte, which surveyed 188 CFOs of FTSE 350 and large, private companies in the UK, says risk appetite is supported by a rebound in the US economy, UK growth and easy access to finance.
Of those surveyed, 72% say now is a good time to take risk onto their balance sheets, up from 65% in the previous quarter, and three times as high as this time last year.
However, perceptions of economic and financial uncertainty rose to 56% in the third quarter for the first time in two years, up from 49% in the previous quarter.
Scotland’s independence referendum, which has since ended with a “no” vote, was the dominant risk factor. Deloitte noted that perceptions of risk among those who completed the survey before the result were twice as high as for those who responded after.
Weakness in the eurozone economy as well as geopolitical risk in the Middle East and the Ukraine were other concerns.
While there is now more optimism on the prospects of the UK, sentiment about the eurozone has deteriorated markedly. Confidence in emerging markets continued to decline, too.
Ian Stewart, chief economist at Deloitte, says that with a resurgent US economy, good growth in the UK and plentiful liquidity, firms have “shrugged off” the effects of rising uncertainty and weakness in Europe.
“Large corporates face few obstacles to raising finance, credit is cheaper, and more available, than at any time in the last seven years,” he says.
“In reversal of the situation during the credit crunch, CFOs say that financing conditions are one of the key factors enabling companies to raise investment spending.”
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