CFO fears of double-dip recession ease

UK FINANCE directors are more confident about the economy as their company finances increased at the fastest rate since 2007, a report by Deloitte has shown.

The quarterly survey of CFO sentiment revealed that the amount of FDs who expect a double-dip recession has fallen to 30% from 54% in December.

However, while business confidence is higher now than in in the first quarter of 2011, corporates are less likely to be raising capital spending, undertaking M&A or introducing new products than 12 months ago. Instead, there is a greater focus on defensive actions.

“One interpretation is that relatively high levels of cash being held by UK corporates represent an insurance policy against a volatile, slower-growth environment said Ian Stewart, Deloitte chief economist.

Perceptions of uncertainty have eased since December but the world remains unpredictable and 84% of CFOs still rate the general level of uncertainty facing their business as being above normal.

The number of CFOs expecting one or more members of the single currency to leave the euro this year has dropped to 26%, from 37% last quarter.