A survey conducted by Deloitte accountancy firm has revealed that more than half of the financial directors taking part are expecting the UK to slip back into recession in 2012. In comparison to 27 percent believing further recession was likely in 2011, the figure who considers a recession likely in 2012 has risen to 54 percent.
The survey, which is carried out quarterly, questioned the chief financial officers of UK corporations along with 64 finance chiefs of FTSE 100 and FTSE 250 companies. The majority of the business leaders believe that a euro break up poses the biggest threat to their companies in 2012. At least one of the EU member states is expected to leave the Eurozone in 2012, according to 37 percent of the finance directors. The chief economist of Deloitte, Ian Stewart said:
“The results illustrate the corrosive effect of uncertainty on corporate spending: 87 % of finance directors believe this is a bad time to be taking additional risk on to their balance sheet. Just as it happened in late 2008, finance directors are reacting to a tough climate by strengthening their balance sheets.”
Stewart also pointed out that the financial strategy of the largest UK companies has turned around since last year. 2011 started as a time to increase capital spending and for expansion into new markets. 2012 has started with spending cuts and increased cash flow. During November, Deloittes and the Institute of Chartered Accountants in Scotland held a survey which revealed two thirds of respondents in Scotland believe that the euro collapse will create devastation for businesses.
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