(Alliance News) - Bank borrowing and debt issues as sources to bolster corporate coffers in the UK are "less attractive" now than at any time since the financial crisis, a survey by Deloitte found on Tuesday.
The latest chief financial officer survey by the accounting company found that "demand for credit is well below average levels".
"With interest rates at 3.5%, CFOs rate credit as being more expensive than at any time since 2009. Just over two-thirds of CFOs rate credit as costly, while 45% say that new credit is hard to get," Deloitte said.
The survey features a panel of 53 CFOs, 17 from FTSE 100 constituents and 32 from the FTSE 250. Together, the firms they represent are worth GBP363 billion, some 15% of the UK quoted equity market.
The survey asked the CFOs their view on a number of possible outlook risks, including Brexit, energy prices, the war in Ukraine, inflation, Covid-19 and supply chain disruption. The perception of risk for a number of those factors ebbed in the recent survey.
"The largest decline relates to inflation, a shift that is reflected in reduced perceptions of risk around supply chains, labour shortages and the prospect of higher interest rates. Concerns about energy prices and supply have eased significantly, consistent with the decline in energy prices since the summer and high levels of European stocks of gas," Deloitte said.
"CFOs report a fall in supply disruptions faced by their businesses over the quarter and expect substantial further falls over the next two years. Only one in ten CFOs expect significant or severe supply disruptions in a year's time, the lowest reading since the question was included in the survey in mid-2021."
CFOs expect inflation to ebb to 5.8% in a year's time and sit at 3.3% two years from now. The Bank of England's target inflation rate is 2%.
Deloitte analyst Ian Stewart added: "The most aggressive tightening of monetary policy in more than 30 years is reshaping corporate attitudes to debt. Not since the credit crunch have CFOs rated debt as being less attractive as a source of finance for their businesses than they do today. When interest rates were at very low levels, debt finance easily eclipsed equity as a source of finance. CFOs now see them as being roughly on par."
By Eric Cunha, Alliance News news editor
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