Survey of CFOs shows 75% support staying in EU but many are postponing key financial decisions as jitters spread through British economy

Support for staying in the EU has risen among the finance bosses of big British firms, but they are also increasingly jittery as June’s referendum approaches.

With opinion polls tight, a survey of chief financial officers (CFOs) indicates they are holding off hiring new staff and reluctant to spend on new equipment before the public vote. Risk appetite has fallen to a three-year low, according to the poll of 120 CFOs of FTSE 350 and other large private companies.



The survey by consultancy Deloitte put the referendum at the top of CFOs’ risk lists, eclipsing longstanding concerns about turmoil in emerging markets and growth in the eurozone.

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“A fog of uncertainty has descended on the corporate sector. Perceptions of financial and economic uncertainty are back to levels last seen in early 2013 as the euro crisis abated,” said Deloitte chief economist, Ian Stewart.

The quarterly poll found support for staying in the EU had risen to 75% of CFOs, up from 62% in the final quarter of 2015. But Deloitte noted that in that earlier poll, 28% of CFOs said their position would depend on the outcome of David Cameron’s renegotiation of UK membership. That response was not an option in this quarter’s survey.



In the latest survey, conducted after the prime minister announced his EU deal and the 23 June referendum date, 8% of CFOs said UK business would benefit from leaving the EU and 17% were uncertain of their position or preferred not to say.

Support for staying in EU rises

Facebook Twitter Pinterest Support for staying in the EU and for leaving, according to last two Deloitte CFO surveys. Illustration: Deloitte

Stewart said the rise in support for staying in the EU and the increase in risk aversion mirrored what the consultancy had seen among its clients.

“Since the announcement of the date of the referendum, demand from clients to understand the risks has gone up. A year ago it was a distant possibility, now we have got a date and people are more focused on the issues,” he said.

When CFOs were asked how they thought EU membership had benefited the UK economy and UK businesses, 89% said it had helped UK export performance and 86% said it had attracted foreign direct investment.

Chiming with business groups’ complaints over red tape, the survey showed the legal, regulatory and compliance framework aspects of UK membership ranked lowest with just 15% of CFOs saying they benefit the UK.

Export help seen as top EU benefit

Facebook Twitter Pinterest What benefits CFOs see in EU membership. Illustration: Deloitte

The survey echoed other reports suggesting companies are nervous about investing until they know the outcome of the June vote. A consumer survey last week also noted “Brexit jitters” with households gloomier about the UK’s economic prospects. according to market research company GfK.

“We are already seeing the unsettling effect of the referendum on business sentiment,” said David Sproul, senior partner and chief executive of Deloitte.

“While voices on both sides of the debate argue about the potential economic impact of a ‘leave’ vote, the referendum appears to already be contributing to a slowdown.”

Referendum tops risk list

Facebook Twitter Pinterest How CFOs rate risks to business from a range of factors. Illustration: Deloitte

CFOs ranked the EU referendum as the biggest risk their businesses face. On a scale of 0 to 100 (where 100 is the greatest risk) CFOs gave the vote a rating of 54, up from 50 three months earlier. That was ahead of economic weakness in the euro area at 48, weak demand in the UK at 46 and the prospect of higher interest rates in the UK at 44.



Despite those worries, only 26% of CFOs said their company had made, or was in the process of making, contingency plans for a possible British exit from the EU. More than half, 53%, said they had made no such plans.

Stewart said that could reflect the high level of uncertainty over what trade, migration and other deals would be put in place in the event of a vote to leave.

“Given the wide range of alternatives to EU membership there will be some corporates who say this side of the referendum there is little we can do,” he said.

The report will add fuel to the debate among high-profile business figures over the benefits of staying in or leaving the EU.

Last month, a group of 250 business leaders, including the former boss of HSBC, added their voice to the Brexit campaign, saying EU membership harms the UK’s economic prospects.

That followed a letter in February in support of the UK remaining in the EU signed by the bosses of some of Britain’s biggest companies, including easyJet, BAE Systems and Shell.

The Bank of England has also waded into the EU referendum debate, warning last week that a vote to leave could cause a run on sterling, a credit crunch and higher interest rates for mortgage holders and businesses. The Bank’s financial policy committee judged that the closely fought campaign posed the “most significant near-term” domestic risk to financial stability.