Business support for deficit reduction increases

26 Sep 14

Chief finance officers across Britain’s top 350 firms have backed the government’s deficit-reduction plans, but are warning that political uncertainty around next year’s general election could hit growth prospects.

A poll of 118 CFOs of FTSE 350 companies by accountants Deloitte found that current public spending plans were supported by 89%, up from 58% two years ago.

Overall, public policy is seen as helpful to the long-term success of businesses, with 97% of those polled agreeing that the Bank of England’s monetary policy was appropriate, while 94% approved of the government’s labour market policies and 90% backed the coalition’s tax policy.

However, perceptions of economic and financial uncertainty rose in the third quarter for the first time in two years, with 56% of CFOs now saying the level of financial and economic uncertainty facing their business was above normal, high or very high, up from 49% in the second quarter of the year.

Among the factors contributing to this were the Scottish independence referendum, the 2015 general election and a possible UK referendum on EU membership in 2017.

These political factors were all rated as bigger worries than economic concerns such as higher interest rates.

Publishing the results of the poll, Deloitte’s chief economist Ian Stewart said it was clear political risk had eclipsed worries about the economy for large firms.

‘Weakness in the euro area economy, events in the Middle East and Ukraine and, particularly, the Scottish referendum have created new uncertainties,’ he added.

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