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October 11, 2010    

CFO confidence falls to 18-month low

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by Kay Murchie

Confidence among chief financial officers (CFOs) has fallen to the lowest level in 18 months.

According to accountancy group Deloitte, confidence among these executives fell for the third consecutive quarter.

More than a third of those surveyed said there is a risk that the economy will fall back into recession.

Margaret Ewing, of Deloitte, said: “The financial and capital crisis may seem to be over but the headwinds from the recession are leaving CFOs cautious on the recovery.”

The survey also found that many CFOs are hesitant in taking risks at this moment, and are instead, making their priorities to cut costs and increase cash flow.

However, 25% of those surveyed said they are focusing on new products or services, and expanding into markets or embarking on the acquisition trail.

In the meantime, accountancy and business advice firm BDO has warned that economic growth could grind to a halt at the start of 2011 and shrink in the second quarter.

BDO is calling on the Bank of England to inject more money into the economy, via its quantitative easing (QE) scheme.

Last week, the Bank’s Monetary Policy Committee (MPC) elected to keep UK interest rates on hold at the historically low level of 0.5% and opted not to inject any more funds into the economy via the QE scheme.

The Bank embarked on its £200 billion QE programme in March 2009, when the economy was in the midst of its worst recession in more than five decades.

Policymakers, Adam Posen and Martin Weale, as well as the Institute of Directors (IoD), have all have recently suggested injecting more cash into the economy to boost growth.

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