The study by Global American Express and research group CFO Research Services surveyed 541 senior finance executives across the world. It found that whilst 63% of the world’s CFOs have plans in place for investing in growth over the next year, 53% of their counterparts in the UK have plans to tighten up on spending and investments to safeguard profit.
During the recession years, many companies have become risk averse and amassed large cash reserves, but the difference in spending attitude between the UK and US is stark. Among North American respondents, 56% are planning to use some of the cash reserve for investments, research and acquisitions, but in the UK, only 27% of CFOs have the same plan.
But despite the austere spending attitude of those UK CFOs, 58% of them were ‘forecasting a return to substantial economic growth at some point this year.’ Its unclear where that growth has come from if all these companies are keeping such a tight hold of the investment purse-strings. However, in a sign that cost control has allowed companies to chart the year ahead with more accuracy, 76% of UK businesses are confident that they will meet their 2012 targets.
About a quarter of those surveyed in the UK said they plan to increase headcount in the coming 12 months, again in contrast with much larger numbers elsewhere (e.g. India 57%, Mexico 63%), but in the vein of prudence and caution, 68% of UK respondents said that any new hires will be only for the purpose of improving expertise or acquiring specialist skills for the business. In reality however, the majority (58%) of UK CFOs said they are actually expecting a modest reduction in headcount instead of any increases.
With the backdrop of uncertainty in the eurozone – which has intensified in recent weeks – it is hardly surprising that UK businesses are trying to sit tight and preserve profitability. The US economy is expanding once more, and this survey suggests that American CFOs have got their confidence back. Britain is now technically in recession. Hardly confidence-building. Still, it could be worse. And all we have to do is look across the Channel for a dose of Schadenfreude...