Confidence grows among European finance bosses as Brexit doubts push UK to back of pack

Jasper Jolly
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A strong European economic recovery has helped build up confidence in the EU (Source: Getty)

Confidence among Europe’s business leaders is growing as doubts around the economic outlook recede, although Brexit uncertainties continue to concern UK bosses, according to a major survey to be published today.

Some 43 per cent of more than 1,500 chief financial officers (CFOs) polled by accountants Deloitte say they are more optimistic about the prospects for their company than they were three months ago, up from 38 per cent in the first quarter.

The European economy over the past year has accelerated markedly after seeing off multiple political risk events that threatened to derail a fragile recovery.

Read more: Eurozone unemployment falls further as strong growth run continues

The Eurozone economy grew by 0.6 per cent in the third quarter of 2017, continuing a strong run of 2.5 per cent growth over the last year.

The building confidence has prompted an improved outlook for capital expenditure. Some 42 per cent of the managers surveyed plan to increase investment, up from 40 per cent in the first quarter weighted by GDP.

However, the UK lagged behind the rest of Europe for capital expenditures, recording the lowest figure, at 22 per cent, as firms await signs on the shape of future trading relationships after Brexit before committing to spending.

Uncertainty is highest in the UK of any of the major European economies surveyed, with 85 per cent of British CFOs saying there is currently a “high level of financial and economic uncertainty”.

Read more: Eurozone economic confidence hits its highest point since 2001

The reading for overall optimism among UK CFOs declined by 14 percentage points, with high inflation dragging back consumer spending.

The Bank of England believes inflation peaked last month, meaning the worst of the hit to the UK economy from rapidly rising prices may soon diminish.

The Bank’s own survey data points to “modest growth in investment over the coming year” from UK firms, although its agents also report that Brexit expectations are also dragging on spending.

Read more: Hammond: No deal will be "sub-optimal" for financial services

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