British firms’ appetite for risk has increased since a national election in May, a survey of finance directors showed yesterday, with businesses confident that Prime Minister David Cameron will be able to negotiate better ties with the EU before holding a referendum on whether the UK should stay or leave.
Cameron’s centre-right Conservative Party was re-elected in May, allaying concerns voiced by a number of firms about the opposition Labour Party’s business policies.
He is trying to renegotiate a better EU deal for Britain on issues like immigration, welfare and competitiveness before holding a public vote by the end of 2017.
The survey by audit and consulting group Deloitte showed that concern about the vote had fallen to an average risk rating of 45/100 in the second quarter of 2015 from 56/100 at the start of 2014. A majority of firms thought Cameron could succeed in each of seven areas he is targeting for change.
Chief financial officers “are more relaxed about the referendum than they were before May, perhaps a sign they believe the vote will endorse continued membership,” said Deloitte’s UK chief executive David Sproul.
The Deloitte survey of CFOs at 122 private and publicly-listed British firms showed 74 per cent backed continued EU membership, citing the benefits to export businesses, inward investment and free movement of workers.
The UK recovery is regaining momentum
“While there is a clear desire among CFOs for the UK to remain a member of the EU, there can be little doubt that they see opportunities to establish a more advantageous relationship for the UK.”
The survey, conducted in June, said 59 per cent thought it was a good time to take risk, up from a two-year low of 51 per cent recorded before the election.
“Risk appetite is on the rise, uncertainty has fallen and CFOs enter the second half of the year in expansionary mode. Our survey suggests the UK recovery is regaining momentum,” Deloitte chief economist Ian Stewart said.
The survey highlighted instability in the eurozone and the possibility of tightening monetary policy in Britain and the United States as the greatest challenges facing businesses.