CFOs rate borrowing as less attractive now than at any time since the financial crisis, with demand for credit flagging, says Deloitte

Finance bosses see bank borrowing and debt issuance as less attractive sources of finance now than at any time since the financial crisis, according to a report published today by Deloitte.

Appetite for credit is consequently well below average levels and flagging among chief financial officers (CFOs), with only 28 per cent saying they expect their company’s demand for it to increase over the coming 12 months, according to Deloitte’s latest UK CFO Survey. It took place last month, and saw about 80 finance chiefs take part, including those at 17 FTSE100 and 32 FTSE250 companies, with the combined market value of the 53 participating UK-listed firms coming to £363 billion, the professional services giant added.

Seven in ten said they currently rate credit as costly, while 45 per cent say new credit is hard to get, and CFOs on average believe inflation will fall sharply from 10.7 per cent at present to 5.8 per cent in a year’s time. Additionally, a net 59 per cent expect corporates to reduce hiring in the next 12 months, but a net 92 per cent predict higher investment in workforce skills over the next three years,

Ian Stewart, chief economist at Deloitte, said: “The most aggressive tightening of monetary policy in more than 30 years is reshaping corporate attitudes to debt. In the last two years CFOs have had to deal with the biggest inflationary shock since the late 1980s. But the tide seems to be turning and concerns about energy supply and prices have fallen back. CFOs’ perceptions of inflation risk have dropped from October’s peak, and expectations for supply shortages, recruitment difficulties and inflation have eased.”