Finance chiefs face 2010 with more optimism though fear of further recession remains

Concerns about credit and liquidity have subsided and risk appetites are also at their most voracious since early 2008, according to Deloitte's latest CFO survey, which polls finance directors at FTSE 100 and FTSE 250 firms.

Although optimism has surged to the highest level since the quarterly survey began two years ago, finance directors remain fearful of a second economic downturn.

Almost half of finance chiefs polled said the economy was their greatest concern for 2010, with many raising the spectre of a double dip recession.

James Baird, lead partner at Deloitte in Scotland, said: "Two stories seem to be playing out. On the one hand, the degree of financial risk facing the corporate sector has fallen as the financial system has stabilised.

"The strategies adopted by CFOs (chief financial officers] to deal with the recession have also paid dividends, particularly those focused on controlling costs, boosting cash flow and staying close to investors.

"On the other hand the outlook for the economy remains uncertain and fears of a 'double dip' are widespread. Credit conditions have improved, but they remain difficult."

Although finance chiefs still complain about the pricing of credit, concerns over liquidity have eased significantly since December 2008 when credit shortages were cited as the number one threat. Eight out of ten finance directors now believe the UK banking system is in a strong enough position to support and sustain the recovery.

Ian Stewart, chief economist at Deloitte, said although the business environment in the UK has not yet stabilised to pre-crisis conditions, there is cause for optimism in 2010.

He said: "The economy and the financial system are a long way from normal but things are looking up."