Accountants in Manchester may be interested to learn that a lot of chief financial officers think the UK is going to sink back into recession this year.
The CFO Survey from Deloitte discovered that finance officers think the biggest threat to UK firms is a possible break-up of the euro. Respondents think there is a 37% chance that at least one country will leave the euro this year, and if the euro collapses, another credit crunch would follow and exchange rates and asset prices would fluctuate dramatically.
Chief financial officers also said that companies must focus on strengthening their balance sheets this year, as well as increasing cash flow and reducing costs. Smaller businesses may need to turn to their accountant for help in realising these priorities.
Ian Stewart, the chief economist at Deloitte, said the euro is still the number one concern among CFOs but is closely followed by fears of a return to recession. In fact they now believe there is a 54% chance of a double-dip. This time last year a further recession was only a 27% possibility.
64% of the survey’s respondents think the UK is in for a prolonged period of weakness that will last for longer than 12 months. Large organisations are already under financial stress and the availability of credit is at its worst level for more than 3 years.
As well as struggling to access credit, smaller companies are still bogged down with complex income tax reporting requirements. Furthermore, they will have to fork out additional money to upgrade their payroll systems to cope with HMRC’s real time reporting. It’s therefore hardly surprising that CFOs are less than optimistic about the business prospects for the coming year!