Find out more at http://www.deloitte.co.uk/cfosurvey The second quarter's Deloitte CFO Survey, published on 9th July 2013, shows a sharp rise in risk appetite at the top end of the corporate sector and a shift towards expansionary strategies. The Deloitte CFO Survey, launched in 2007, is a quarterly survey of Chief Financial Officers and Group Finance Directors of major UK companies. Over 300 CFOs, mainly from FTSE 350 companies, have joined the CFO Survey panel. The Survey captures shifts in UK CFOs' opinions on valuations, risks and financing and has become a benchmark for gauging financial attitudes of major corporate users of capital. The Deloitte CFO Survey has been widely quoted in the media and is firmly established with policymakers. The Bank of England has cited the CFO Survey several times in its publications such as the quarterly Inflation Report and the monthly Trends in Lending report. The findings have also been quoted in the minutes of the Bank's Monetary Policy Committee meetings.

1. Major UK businesses shifted towards expansionary strategies
in the second quarter, highlighting a sharp rise in risk
appetite at the top end of the corporate sector.
The recession-era focus on corporate cost cutting and debt
reduction is easing and expansion is coming back onto the
agenda for many businesses.
In a sign of an improving domestic outlook, the shift to
more pro-growth strategies has been driven by companies
which earn the majority of their revenues in the UK.
The latest survey took place in the second half of June, a
period of turbulence in financial markets, and one marked
by concerns about the withdrawal of quantitative easing
in the US and a cash crunch in China. Nonetheless, CFOs’
perceptions of macroeconomic and financial uncertainity
facing their businesses have fallen to a three-year low.
Earlier this year, CFO respondents said that economic and
financial uncertainty was the biggest single factor weighing
on investment. A less risky environment clearly bodes well
for business investment. CFOs’ expectations for hiring and
investment are back to where they were in early 2011 when
the world seemed set fair for recovery.
Q2 2013
Planning for growth
The Deloitte CFO Survey
July 2013

2. Chart 1. CFO priorities: Expansionary vs. defensive strategies
Average of the % of CFOs who rated expansionary strategies (introducing new products/services or
expanding into new markets, expanding by acquisition and increasing capital expenditure) and defensive
strategies (reducing costs, reducing leverage and increasing cash flow) as a strong priority.
39%
Defensive strategies
Expansionary strategies
35%
31%
19%
10
Q3
10
Q4
11
Q1
11
Q2
11
Q3
11
Q4
12
Q1
12
Q2
12
Q3
12
Q4
13
Q1
13
Q2
23%
27%
The Deloitte CFO Survey

3. For large companies shortages of capital no longer stand
in the way of investment. CFOs report that credit is
cheaper and more easily available than at any time in the
last six years.
Business optimism has risen for the fourth consecutive
quarter and is now well above average. It is symptomatic
of the changed mood that a record 45% of CFOs say that
now is a good time to take risk onto their balance sheets.
The last five years demonstrate that corporate sentiment
is changeable, responding to the ebb and flow of news
and shifts in financial markets. Uncertainty has not died,
but it has declined. Rising risk appetite and a shift towards
expansion show that large UK corporates are increasingly
planning for growth.
Authors
Ian Stewart
Chief Economist
020 7007 9386
istewart@deloitte.co.uk
Debapratim De
Senior Economic Analyst
020 7303 0888
dde@deloitte.co.uk
Alex Cole
Economic Analyst
020 7007 2947
alecole@deloitte.co.uk
Contacts
Ian Stewart
Chief Economist
020 7007 9386
istewart@deloitte.co.uk
Mark FitzPatrick
Vice Chairman and
CFO Programme Leader
020 7303 5167
mfitzpatrick@deloitte.co.uk
The Deloitte CFO Survey

4. Optimism rises
CFO optimism has risen for the fourth consecutive quarter and now runs above its long-term average.
Chart 2. Business confidence
Net % of CFOs who are more optimistic about financial prospects for their company now than three months ago
LessoptimisticMoreoptimistic
-70%
-50%
-30%
-10%
10%
30%
50%
70%
12
Q4
13
Q2
12
Q1
11
Q2
10
Q3
09
Q4
09
Q1
08
Q2
07
Q3

5. CFO perceptions of economic uncertainty have fallen
significantly since 2012.
73% of CFOs believe their businesses face an above
normal, high or very high level of external macroeconomic
uncertainty, down from a peak of 97% in late 2011.
Chart 3. Uncertainty
% of CFOs who rate the level of external financial and economic uncertainty facing their business as above normal,
high or very high
68%
73%
78%
83%
88%
93%
98%
13
Q2
13
Q1
12
Q4
12
Q3
12
Q2
12
Q1
11
Q4
11
Q3
11
Q2
11
Q1
10
Q4
10
Q3
Optimism rises

6. Fears about a break-up of the euro area have continued
to ease.
The probability CFOs assign to the euro area breaking up
in the next 12 months has fallen from 36% to 9% in the
last year.
Chart 4. Average probability of euro break-up
Probability assigned by UK CFOs to the likelihood of any of the existing members of the euro area not being in the single
currency in the next 12 months
37%
26%
36%
27%
22%
18%
9%
0%
5%
10%
15%
20%
25%
30%
35%
40%
13
Q2
13
Q1
12
Q4
12
Q3
12
Q2
12
Q1
11
Q4
Optimism rises

7. Rising risk appetite
Recent revisions to official data show that the UK narrowly
avoided a double-dip recession at the beginning of 2012.
Concerns about the UK sliding back into recession have
eased. On average, CFOs assign a 23% chance to the UK
experiencing a recession in the next two years.
Chart 5. Average probability of a double-dip recession
Probability assigned by UK CFOs to the likelihood of a renewed recession in the next two years
20%
25%
30%
35%
40%
45%
50%
55%
60%
13
Q2
13
Q1
12
Q4
12
Q3
12
Q2
12
Q1
11
Q4
11
Q3
11
Q2
11
Q1
10
Q4
10
Q3
10
Q2
10
Q1

8. Rising risk appetite
Chart 6. Risk appetite
% of CFOs who think this is a good time to take greater risk onto their balance sheets
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
13
Q1
12
Q3
12
Q1
11
Q3
11
Q1
10
Q3
10
Q1
09
Q3
09
Q1
08
Q3
08
Q1
07
Q3
Improving business sentiment and reduced perceptions of
uncertainty have bolstered corporate risk appetite.
Risk appetite among CFOs is at the highest level since the
survey began. 45% of CFOs think now is a good time to
take greater risk onto their balance sheets.

9. The US equity market reached all-time highs in May 2013
as investors shifted into higher risk assets on hopes of an
acceleration in America’s recovery.
But equities dipped in late May on fears that the US Federal
Reserve would slow its programme of quantitative easing.
It is striking that CFOs’ appetite for risk has risen despite
turbulence in equity markets during the survey period.
Rising risk appetite
Chart 7. Standard & Poor’s 500 equity index
600
800
1,000
1,200
1,400
1,600
2007 2008 2009 2010 2011 2012 2013

10. CFOs report a continued improvement in their companies’
financing conditions.
Our panel of CFOs, mostly representing large UK corporates,
sees credit as being cheaper and more easily available now
than at any time in the past six years.
CreditiscostlyCreditischeap
CreditisavailableCreditishardtoget
Chart 8. Cost and availability of credit
Net % of CFOs reporting credit is costly and credit is easily available
Cost of credit (LHS)
Availability of credit (RHS)
-100%
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
-100%
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
13
Q1
12
Q3
12
Q1
11
Q3
11
Q1
10
Q3
10
Q1
09
Q3
09
Q1
08
Q3
08
Q1
07
Q3
Easy financing conditions

11. AttractiveUnattractive
Chart 9. Favoured source of corporate funding
Net % of CFOs reporting the following sources of funding as attractive
Bond issuance
Bank borrowing
Equity issuance
-60%
-40%
-20%
0
20%
40%
60%
80%
07
Q3
08
Q1
08
Q3
09
Q1
09
Q3
10
Q1
10
Q3
11
Q1
11
Q3
12
Q1
12
Q3
13
Q1
Raising debt, through bond issuance or bank borrowing,
remains CFOs’ clear favourite for financing their businesses.
Equity issuance has also gained favour among CFOs this year.
The general picture from this survey is of a corporate sector
which is unconstrained by capital shortages.
Easy financing conditions

12. IncreaseDecrease
Chart 10. Outlook for corporate revenues and margins
Net % of CFOs who expect UK corporates’ revenues and margins to increase over the next 12 months
Revenues
Operating margins
-70%
-50%
-30%
-10%
10%
30%
50%
70%
13
Q2
13
Q1
12
Q4
12
Q3
12
Q2
12
Q1
11
Q4
11
Q3
11
Q2
11
Q1
10
Q4
10
Q3
CFOs’ expectations for revenue and profit growth are at the highest level in two-and-a-half-years.
Easy financing conditions

13. CFOs are placing greater emphasis on expansion through introducing new products or services and by acquisition.
They have also softened their focus on cost reduction to the lowest level in two years.
Chart 11. Corporate priorities in the next 12 months
% of CFOs who rated each of the following as a strong priority for their business in the next 12 months
Disposing of assets
Reducing leverage
Raising dividends or share
buybacks
Increasing capital
expenditure
Expanding by acquisition
Reducing costs
Introducing new products/
services or expanding
into new markets
Increasing cash flow
40%
38%
34%
21%
14%
13%
12%
5%
39%
35%
42%
17%
15%
18%
13%
6% 2013 Q2 2013 Q1
CFOs less defensive

14. Our index of corporate expansion sums up the overall balance of CFOs’ priorities, netting defensive business strategies, such
as cost control, off against expansionary ones.
UK-facing businesses, those that derive more than 70% of their revenues from the UK, have been consistently more
defensive than their international facing peers.
This seems to be changing. UK-facing companies are now more expansionary than at any time in the last two years.
ExpansionaryDefensive
Chart 12. Index of corporate expansion: International & UK-facing corporates
Difference between the arithmetic averages of the % of CFOs who rated expansionary and defensive strategies as a strong
priority for their business in the next 12 months.
Expansionary and defensive strategies defined under Chart 1.
International
UK-facing
-30%
-20%
-10%
0%
10%
20%
30%
13
Q2
13
Q1
12
Q4
12
Q3
12
Q2
12
Q1
11
Q4
11
Q3
11
Q2
CFOs less defensive

15. CFOs’ expectations for hiring, investment and discretionary spending are back to where they were in early 2011 when the
world seemed set fair for recovery.
IncreaseDecrease
Chart 13. Outlook for capital expenditure, hiring and discretionary spending
Net % of CFOs who expect UK corporates’ capital expenditure, hiring and discretionary spending to increase over the next
12 months
Capital expenditure
Hiring
Discretionary spending
-100%
-80%
-60%
-40%
-20%
0%
20%
40%
60%
13
Q2
13
Q1
12
Q4
12
Q3
12
Q2
12
Q1
11
Q4
11
Q3
11
Q2
11
Q1
10
Q4
10
Q3
Growth beckons

16. The Deloitte Corporate Compass captures CFO thinking
under four key metrics. All have improved in the last year.
Our special question this quarter assesses CFOs’ thinking on
the tasks facing the new Governor of the Bank of England,
Mark Carney. CFOs expressed strong support for the Bank’s
performance on inflation, sterling and providing monetary
stimulus to the economy.
Mr Carney also faces challenges. A majority of CFO’s rate
the Bank’s performance on getting credit to the economy
as inadequate or worse. And a clear majority do not believe
that the Bank will be able to meet its mandate and keep
inflation below its 2.0% target.
Q2 2013
Q2 2012
Chart 14. Deloitte Corporate Compass
CFOs’ assessment of UK corporates’ financing conditions,
risk appetite, level of uncertainty faced by them and the
extent to which they are pursuing expansionary strategies
Higher is better
Improving financing
conditions
Rising risk
appetite
Lower uncertainty
Expanding
the business
0
6
2
4
8
10
Growth beckons

17. Bank's performance: % saying good/very good
Providing an appropriate level of monetary stimulus
to the economy through interest rates, quantitative
easing, etc.
94%
Maintaining an appropriate exchange rate for
sterling
85%
Controlling inflation 65%
Ensuring the flow of credit in the economy 48%
Easy money: % saying very/somewhat likely to
cause following problems
Prolonged period of UK inflation running
significantly above the Bank’s 2.0% target
85%
Bubble in UK residential property market 67%
Rise in the number of so-called zombie companies,
those for whom interest payments make up a high
proportion or all of their profits
56%
Further significant devaluation of sterling 45%
Chart 15. Assessing the Bank of Engfand’s performance and risks of easy money
% of CFOs who think the Bank’s performance has been good or very good in managing the following issues (left) and % of
CFOs who think that current ultra-loose monetary policy is likely to cause the following problems (right)
Growth beckons

18. The macroeconomic backdrop to the
Deloitte CFO Survey Q2 2013
The outlook for the US economy continued to improve with
the labour market and housing showing signs of strength.
Euro area data remained weak and activity in China and
a number of other emerging markets softened. The UK’s
economic outlook brightened with broad-based rises in
housing activity and business confidence.
Aggressive monetary and fiscal stimulus in Japan led
economists to revise up their Japanese growth forecasts.
Financial markets became more volatile. Government bond
yields rose sharply and markets brought forward their
expectations for interest rate rises in the US and Europe.
Equities fell from late May on fears that the US Federal
Reserve would slow its programme of quantitative easing.
The sell-off abated towards the end of the quarter.
CFO Survey: Economic and financial context

19. Economic and financial context
UK GDP growth: Actual and forecast (%)
UK expected to see weak recovery in 2013
Quarter-on-quarter
growth
Forecasts
Year-on-year
growth
Source: Office for National Statistics (ONS) consensus forecasts from The Economist and Deloitte calculations
-8
-6
-4
-2
0
2
4
6
2013201220112010200920082007

20. Economic and financial context
VIX Index – a measure of equity market volatility
Financial stress
edged higher
in June
Source: ONS, consensus forecasts from The Economist and
Deloitte calculations
Greaterfinancialstress
0
10
20
30
40
50
60
70
80
90
2013201220112010200920082007

21. UK private and public sector job growth (thousands)
Source: ONS
Private sector hiring offsets public sector
job losses
Private sector
-300
-200
-100
0
100
200
300
400
500
Q1
13
Q2
12
Q3
11
Q4
10
Q1
10
Q2
09
Q3
08
Q4
07
Q1
07
Public sector
Economic and financial context

22. Economic and financial context
UK annual CPI inflation (%)
UK inflation down
from 2011 peak, still
above 2.0% target
Source: ONS
0
1
2
3
4
5
6
7
8
9
121008060402009896949290

23. Two-chart summary of key survey messages
Risk appetite
% of CFOs who think this is a good time to take greater risk onto their balance sheets
Risk appetite
at 6-year high
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
13
Q1
12
Q3
12
Q1
11
Q3
11
Q1
10
Q3
10
Q1
09
Q3
09
Q1
08
Q3
08
Q1
07
Q3

24. Two-chart summary of key survey messages
ExpansionaryDefensive
Index of corporate expansion: International & UK-facing corporates
UK-facing companies most
expansionary in 2 years
Difference between the arithmetic averages of the % of CFOs who rated expansionary and defensive strategies as a
strong priority for their business in the next 12 months.
Expansionary and defensive strategies defined under Chart 1.
International
UK-facing
-30%
-20%
-10%
0%
10%
20%
30%
13
Q2
13
Q1
12
Q4
12
Q3
12
Q2
12
Q1
11
Q4
11
Q3
11
Q2

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About the survey
This is the 24th quarterly survey of Chief Financial Officers and Group Finance
Directors of major companies in the UK. The 2013 second quarter survey took place
between 14th and 28th June. 135 CFOs participated, including the CFOs of 37 FTSE
100 and 45 FTSE 250 companies. The rest were CFOs of other UK-listed companies,
large private companies and UK subsidiaries of major companies listed overseas.
The combined market value of the 92 UK-listed companies surveyed is £684 billion,
or approximately 32% of the UK quoted equity market.
The Deloitte CFO Survey is is the only survey of major corporate users of capital
that gauges attitudes to valuations, risk and financing. To join our panel of CFO
respondents and for additional copies of this report, please contact Tulaine Trimble
on 020 7007 1684 or email ttrimble@deloitte.co.uk
Please visit www.deloitte.co.uk/cfosurvey for current and past copies of the survey,
historical data and coverage of the survey in the media and elsewhere.