Corporate spending confidence is waning despite improvement in profits, says a poll conducted among chief financial officers. The same goes for the overall economy as well.
European financial bosses are not feeling confident about the current economic scenario. The ongoing economic woes in the Eurozone have drained the confidence of financial chiefs across Europe. Interestingly, they continue to perform well despite the uncertainty in the market.
According to the same survey, only one in four financial chiefs feel confident about the prospect of their business under the current scenario. Almost 1,300 financial bosses took part in the survey and it was conducted by Deloitte. In the past 6 months, we saw the figure shrinking from 33% to 25%.
It’s the case of almost all the European countries including the UK. Most of them are not optimistic about their future at all. As for financial chiefs in the UK, only 18% said they are optimistic about their business prospects. Speaking of Portugal, 47% said they are optimistic. We must remember the fact that Portugal is fresh from an uncertain election result. However, we must add that Asian countries like China is Also on the Verge of a Financial Crisis, you can read more about here.
The poll gave a true picture of the disappearing confidence in the minds of financial chiefs. One, two thirds of them said that they are confident about their company making profit in the coming year. Speaking of capital spending; only 4 in 10 intend to increase their spending. 15% of the respondents have the notion that they are going to cut down the expenditure. As for new recruits, 22% said that they expect a decline. Only 35% said they are going to hire more people next year.
One thing is clear that companies were hesitant to invest in risky investments. Instead, they chose to sit tight on their money in the previous year. According to Moody’s research that came out a few months ago, European companies are dealing with a cash pile at the moment as there is an increment of 6% in 201.
Things look really worse for the SNP. They are at the risk of losing defense jobs in thousands. As for currency union, things are not really looking in their favor. Moreover, you can’t hope to join EU just like that.
However, a senior person from Deloitte said that companies should be more upbeat about the current scenario, even though it looks bleak at the moment. He said that such scenarios were always there, but most of the European companies have a large pile of cash in reserve and they shouldn’t worry too much. Of course, the uncertainty is here to stay for a while, but things are not as bad as these companies like to project. He said that companies should take this as a business opportunity and try to expand their business. According to him, it holds true especially in the case of companies based in the UK as these companies can lead the rest of the companies in the Eurozone.
However, one has to be realistic about the losing enthusiasm of the chief financial officers across Europe. It has affected bank customers too as they find it hard to trust large banks as a result. Banks will have to change their policies to deal with the current scenario.