The 2010 first quarter Deloitte Chief Financial Officer Survey paints a mixed picture of economic caution combined with improving financial conditions for corporates.

UK CFOs remain cautious about the recovery. 82 per cent of CFOs surveyed expect a sluggish recovery, and the average CFO sees a one third chance of the UK economy suffering a double dip, what we define as a renewed period of several months of contracting economic activity.

Against a backdrop of economic uncertainty, CFO optimism saw a modest decline, the first fall in 18 months. Optimism has eased back even though CFOs said that their company's revenues have, on balance, come in stronger than expected so far this year.

This quarter's special questions look at the political scene. Ninety-three per cent of CFOs think a hung Parliament would be negative for the UK economy. There was a clear consensus among CFOs about what the next government needs to do - 85 per cent of them said deficit reduction should be the next government's priority.

The good news from this quarter's survey is that the financial environment for larger corporates is continuing to improve. Corporate credit availability has returned to pre-recessionary levels and bank borrowing is starting to regain popularity.

For the first time since the survey started in 2007, all three forms of external finance - bank borrowing, corporate bond issuance and equity issuance, are rated as being attractive by a balance of CFOs. None of this is to argue that financing conditions for corporates are back to normal. Even among the large, quoted corporates, most continue to rate credit as "hard to get" and "costly".

CFOs have also significantly reduced financial risk on their balance sheet over the last year, but this process seems to be drawing to a close. In the first quarter 2010 survey, the willingness of CFOs to take risk onto their balance sheets rose to levels last seen in late 2007.

What emerges from this quarter's survey is that financing conditions are getting better. But the survey also shows that CFOs still have plenty to worry about in terms of the pace of the recovery and the election.