Finance chiefs brace for recession

Most chief financial officers at the UK’s biggest businesses are working on the assumption that Britain will fall back into recession this year, according to a poll conducted by Deloitte.

Deloitte’s latest CFO Survey reveals that 54% of respondents expect the UK to suffer a double-dip recession this year, up from 27% a year ago.

The UK CFOs also believe there is a 37% chance of at least one country exiting the euro in 2012 and see the currency’s break-up as the biggest threat to their firms this year.

Finance chiefs believe the euro’s collapse would cause a new credit crunch and trigger major swings in asset prices and exchange rates.

Ian Stewart, chief economist at Deloitte, says: “Against such a backdrop, it is no surprise that, after the euro, a return to recession in the UK is the biggest concern for CFOs in 2012. They are working on the assumption that Britain will fall back into recession.”

The survey also shows that the proportion of finance chiefs rating the level of external financial and macroeconomic uncertainty facing their business as ’high’ or ’very high’ has more than doubled in the last six months to 56%, up from 26% in the summer of 2011.

CFOs also report that credit availability has deteriorated at the fastest rate since Lehman Brothers’ collapse in September 2008.

Stewart says: “Those pinning their hopes for growth on a sharp increase in corporate spending in the UK this year may be disappointed. On balance, CFOs expect corporate hiring, investment and discretionary spending to contract in 2012.”