China Slowdown Hits UK Business Confidence

The latest Deloitte survey of UK Chief Financial Officers released this morning shows that weakness in emerging economies and equity markets has hit business confidence. 

CFOs' perceptions of external financial and economic uncertainty have seen the sharpest rise since we first asked this question five years ago. Emerging markets now rank joint second, together with concerns about euro area growth, on CFOs' list of worries. 60% of CFOs said that the slowdown in China will have a negative effect on their business in the next twelve months.

The proportion of CFOs who think now is a good time to take risk has dropped to 46%, down from 59% in the second quarter and a peak of 72% a year ago. Rising risk aversion is feeding into a more defensive stance on the part of major corporates, with a greater focus on cost reduction and rather less on investment.