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Irish CFOs: optimism rises and uncertainty drops

Jun 08, 2018
CFOs across Europe remain focused on their company’s growth despite levels of optimism and revenue expectations softening, according to Deloitte’s latest European CFO Survey.

Deloitte has collated the results of surveys run by its member firms in 20 European countries for the spring edition of the European CFO Survey, giving the views of 1,652 CFOs.

Focusing on the Irish CFOs, Alan Flanagan, Partner at Deloitte Ireland said: “The findings show that Irish CFOs convey generally bright expectations and outlook once again, despite the Brexit-related unknown we continue to face into.”

Ireland’s key stats are as follows:

  • The high level of financial and economic uncertainty previously faced by 51% of Irish CFOs has decreased significantly to 35%;
  • 57% of Irish CFOs are more optimistic compared to this time six months ago;
  • A shortage of skilled professionals is the third most significant risk in the minds of our Irish CFOs;
  • 84% of Irish CFOs consider a hard Brexit to be a likely outcome; and
  • 80% of Irish CFOs consider a cyber-attack to be a likely event, however only 38% expect this to have a high impact on their business.
From a European perspective, CFOs remain fairly confident about the future, although their mood has turned from overly optimistic to normal. The external financial and economic environment remains highly uncertain for many CFOs. Nonetheless, a growing number of them now consider this a good time to take on more risks, add to their workforce and invest.

Expectations of economic growth in Europe appear to remain solid, although a little momentum has been lost. The strategic priorities of CFOs reinforce this view. Although report’s authors do not see an increase in expansionary strategies, there has been no switch towards defensive strategies either. Apparently, we have not yet reached the tipping point in the economic cycle.

Although CFOs mentioned concerns about the economic outlook and a reduction in demand more often than in the Autumn 2017 Survey, it is the labour market that now keeps them awake at night. In more than half of the 20 countries surveyed, CFOs identified a shortage of skilled labour as a significant risk to their business. With a tightening labour market, companies will need to prepare for fierce competition to attract talent – especially as many of them plan to increase employee numbers over the next 12 months.

For this edition, Deloitte asked CFOs about their perceptions of various risks to the global economy, to understand whether CFOs think that their companies are vulnerable and, if so, where. Their responses provide further evidence that CFOs do not see the current geopolitical and macroeconomic situation as particularly critical for their companies: they consider that the risks most likely to materialise are also those they would expect to have only a small impact on their business. Whether this is because they feel prepared to deal with any problems that may arise, or because they are simply unconcerned and do not feel affected, remains an important point to assess. For example, although a large majority of CFOs consider a rise in protectionism a likely event, on balance they do not consider this to have a high impact on their business. However, views vary among CFOs in different industries; those in manufacturing are much more concerned than CFOs in other industries.

The report’s authors note that while their lack of concern is reassuring in some ways, there exists the possibility that CFOs may be wrong, grossly underestimating the probability that risk events may occur and the impact this would have on their balance sheets and overall business. For example, CFOs consider a major cyber-attack to be a likely event but also attribute to it a low-impact rating for their company. This could turn out to be a very costly misjudgement.

Download the full report here.

Source: Deloitte.