Economy warms up as finance directors see green shoots
27 Aug, 2013
Confidence in the UK’s economic outlook is returning, according to a survey or more than 200 FDs, CFOs, and Senior Finance Officers by The CA magazine in partnership with law firm DLA Piper.
Nearly half (49%) of the senior finance professionals polled believe that the economy will experience ‘slow but consistent growth’ over the next year, compared to just 9.5% who expressed that view this time last year. In contrast, only 6.6% believe ‘things will get worse before they get better’, a big decline from 2012 when 23% anticipated worse times ahead.
However, while many FDs are already expressing cautious optimism, only 3.3% expect ‘strong growth’ in the next 12 months.
Robert Outram, editor of The CA, said: “Thanks to a series of positive announcements on the economic front, and the conditions companies are experiencing themselves, there is a palpably upbeat mood among our FDs. Even so, we are a long way from the boom times and the challenges facing finance professionals are very real.”
The brighter economic outlook is a reflection of more positive business conditions experienced by FDs during the year to date. Nearly three quarters (74%) have experienced opportunities for their business to grow market share organically in 2013, while more than half (53%) have experienced opportunities to grow through acquisition.
In addition, many of the major difficulties experienced by business over the last five years are not quite so problematic now. For example, only 2.5% of FDs reported ‘significantly’ reduced availability of bank finance, compared to 17% last year, and only 2.9% are seeing significantly worse terms for finance compared to 20% last year.
Despite improving economic confidence, the spectre of redundancies still looms large over the economy. A quarter (25%) of FDs are anticipating redundancies within their organisation this year, only a marginal decline from 27% who expected the same last year.
Whilst FD views differ widely about whether responsibility for restoring confidence lies with Government measures or the private sector’s actions, one thing has remained constant from 2012. The most popular solution for restoring economic confidence is for ‘banks to lend more’. The second most popular answer this year was ‘tax cuts for individuals’ followed by ‘cutting red tape’.
Simon Rae, Managing Partner, DLA Piper Scotland said: “Scotland’s FD community has brightened its economic outlook since this time last year, providing a positive sign that confidence is slowly growing in certain parts of the market. With more businesses identifying opportunities for growth either organically or through acquisition, the survey suggests that this cautious optimism is well founded. However, with many FDs warning of imminent redundancies, it seems that we are not out of the woods just yet.”