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Finance chiefs turning to growth strategies

Pursuing expansion is more important for CFOs than cutting costs and stockpiling cash, finds Deloitte survey

BIG BUSINESSES are turning towards expansion and growth strategies as, according to a survey of chief financial officers of the UK’s largest companies by accountants Deloitte.

The quarterly study, which surveyed 116 CFOs, including FTSE 100 and FTSE 250 companies, found that optimism among Britain’s finance chiefs is at the highest level for three years.

For the first time since 2011, pursuing expansion is more important for CFOs than cutting costs and stockpiling cash. “A new mood of confidence pervades,” said Ian Stewart, chief economist at Deloitte.

“The defensive strategies of cost cutting and cash accumulation that saw corporates through the global financial crisis are increasingly out of favour. The priority now is expansion and the balance-sheet cycle has turned decisively towards growth.”

More CFOs are willing to take risk on their balance sheets than at any time in the last six years, while 40% said they intend to introduce new products and services or expand into new markets, while expectations for hiring, capital expenditure and discretionary spending in the coming 12 months are also at a three-year high.

In a reversal of the situation six months ago, CFOs are expecting UK growth will have a more positive boost to their investment plans in the coming 12 months than growth in emerging markets or in the US and Asia.

“High levels of corporate cash and favourable credit conditions suggest that major corporates have the firepower to invest,” said Stewart.

“CFOs have become markedly more positive on prospects for growth in the developed world. There’s greater confidence too, that the euro will hold together.”

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