Business confidence hits record low as finance chiefs predict 20 per cent revenue drop
Business confidence fell by the largest amount on record during the first quarter, according to a survey of chief financial officers published today.
In the first quarter, 84 per cent of finance bosses said they are less optimistic about the prospects for their company than they were three months ago the survey from Deloitte found.
This is the lowest business confidence reading on record, the report said, in contrast to the previous quarter where a majority (53 per cent) of CFOs said they were more optimistic about the financial prospects of their company.
Ninety seven per cent of CFOs said they expect UK corporates’ revenues to decrease in the coming 12 months.
Respondents expected their own businesses’ revenues to be 22 per cent lower on average compared to their pre-covid-19 plans.
CFO perceptions of external uncertainty have risen to the highest level in the history of the survey.
The majority of CFOs surveyed (89 per cent) now feel there is a high or very high level of uncertainty facing their business, a sharp increase compared to 34 per cent in the previous quarter.
Coronavirus has also dramatically reduced the risk companies are willing to take.
The survey found 94 per cent of CFOs are unwilling to take risk onto their balance sheets.
This is the second-lowest reading for risk appetite on record, the lowest level having been observed during the 2008 financial crisis.
CFOs from the survey’s panel of large businesses also reported the sharpest squeeze in credit conditions on record, with a marked deterioration in the availability and cost of debt in the last three months.
Ian Stewart, chief economist at Deloitte, said: “The covid-19 pandemic has seen business confidence drop from an all-time high to an all-time low in just three months.
“CFOs expect the lockdown to ease in May and June and demand in their own sectors to start recovering later this year.
“But there is no expectation of a quick snap back in activity, with most CFOs assuming revenues will not return to pre-crisis levels for at least a year.”