Find out more at http://www.deloitte.co.uk/cfosurvey Risk appetite among the chief financial officers (CFOs) of the UK’s largest companies has reached a seven year high. - CFO risk appetite hits a seven year high despite economic and financial uncertainties. - CFOs more positive on government policies and give strong vote of confidence to Bank of England. - Worries over UK political risks eclipse economic risks for CFOs. - Credit cheaper and more available than any time in seven years. This is the 29th quarterly survey of chief financial officers and group finance directors of major companies in the UK. The Q3 2014 survey took place between 8th and 22nd September. 118 CFOs participated, including the CFOs of 28 FTSE 100 and 40 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 79 UK-listed companies surveyed is £462 billion, or approximately 20% of the UK quoted equity market. The Deloitte CFO Survey is the only survey of major corporate users of capital that gauges attitudes to valuations, risk and financing.

1. Risk appetite among the UK’s largest corporates has
reached a seven‑year high in the third quarter as
Chief Financial Officers shrugged off the effects of
rising uncertainty and a sluggish euro area economy.
Risk appetite is being supported by a resurgent US
economy, good UK growth and plentiful liquidity.
Optimism among big corporates about prospects for
the UK and US economies has improved in the last six
months even as sentiment about emerging markets and
the euro area has declined. Expectations for corporate
revenues and margins remain close to the four‑year high
reached in the second quarter.
CFOs are also increasingly positive about public
policy. We asked CFOs to rate the appropriateness of
official policy – from government, regulators and the
Bank of England – repeating a question we asked in
2012 at the trough of the UK’s double‑dip slowdown.
On average, 77% of CFOs rate policy as being
appropriate in the 11 areas they judged, up from 67%
in 2012. Confidence has risen across all areas with the
largest improvements in the approval ratings on public
spending, tax policy, immigration policy and financial
regulation.
Q3 2014
Risk appetite at new high
The Deloitte CFO Survey
September 2014

2. 0%
20%
40%
60%
80%
2014
Q3
2014
Q1
2013
Q3
2013
Q1
2012
Q3
2012
Q1
2011
Q3
2011
Q1
2010
Q3
2010
Q1
2009
Q3
2009
Q1
2008
Q3
2008
Q1
2007
Q3
Chart 1. Risk appetite
% of CFOs who think this is a good time to taker greater risk onto their balance sheets
The Deloitte CFO Survey

3. The Bank of England gets the strongest vote of confidence,
with 97% of CFOs rating monetary policy, including the
availability of credit and inflation, as appropriate.
Large corporates face few obstacles to raising finance,
with CFOs reporting that credit is cheaper and more
available than at any time in the last seven years. In a
reversal of the situation during the credit crunch, CFOs
say that financing conditions are a key factor in enabling
companies to raise investment spending.
Yet it is not all plain sailing for the corporate sector.
CFOs’ perceptions of economic and financial uncertainty
rose in the third quarter for the first time in two years.
While events in the euro area and emerging markets will
have played a role, Scotland’s independence referendum
seems to have been the dominant factor. Perceptions of
financial and economic uncertainty among CFOs
completing the survey before the result was known were
twice as high as those among CFOs who responded
after the result.
The Deloitte CFO Survey
The Scottish referendum illustrates how political
developments can create uncertainty for business.
This quarter’s survey shows that political risk
continues to eclipse worries about the economy
as the key concern for CFOs. Next May’s general
election and a possible referendum on EU
membership rate as greater risks to CFOs than
interest rate rises or weakness in the euro area.
After several years of economic and financial
turbulence CFOs now see political uncertainty as
being a central risk for their businesses.

4. 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
To access current and past copies
of the survey, historical data and
media coverage, please visit:
www.deloitte.co.uk/cfosurvey
The Deloitte CFO Survey

5. CFO perceptions of economic uncertainty rose
for the first time in two years in the third quarter.
Scotland’s referendum on independence seems to
have had considerable influence on CFO thinking.
Among a quarter of the panellists who responded after
the result of the referendum was known, 30% rated
the level of uncertainty facing their businesses as above
normal or higher. The figure before the result was 63%.
Chart 2. Uncertainty
% of CFOs who rate the level of external financial and economic uncertainty facing their business as above normal, high
or very high
45%
55%
65%
75%
85%
95%
2014
Q3
2014
Q2
2014
Q1
2013
Q4
2013
Q3
2013
Q2
2013
Q1
2012
Q4
2012
Q3
2012
Q2
2012
Q1
2011
Q4
2011
Q3
2011
Q2
2011
Q1
2010
Q4
2010
Q3
Rise in uncertainty

6. This quarter’s survey shows a sharp decline in optimism
about prospects for the euro area. Sentiment about
emerging markets has continued to deteriorate.
By contrast, CFOs remain positive on growth in the UK
and the US.
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
UKUSJapanEmerging markets and
developing economies
Euro
area
54%
34%
70% 75%
95%
85%
9%
-39%
-52%
-13%
Chart 3. Prospects for economic activity
Net % of CFOs reporting an improvement in prospects for economic activity over the last six months in the UK, US, euro area,
Japan and emerging market,
2014 Q1 2014 Q3
Rise in uncertainty

7. CFOs rate political issues – the general election in May
and a possible referendum on the UK’s membership of
the EU – as the two greatest risks facing their businesses.
These rank above economic challenges such as weak
growth in Europe and emerging markets or the bursting
of asset price bubbles.
Rise in uncertainty
Risk ranking from highest to lowest
1 A future UK referendum on membership of the European Union
1 The May 2015 UK general election and the risk of policy change and uncertainty
3 Deflation and economic weakness in the euro area, and the possibility of a renewed euro crisis
4 The prospect of higher interest rates and a general tightening of monetary conditions in the UK and US
5 Weakness and or volatility in emerging markets
6 A bubble in housing and/or other real and financial assets and the risk of higher inflation
7* Scotland’s referendum on independence on 18th September
* The referendum for Scottish independence ranked 4th until 19th September
Chart 4. Risk to business posed by the following factors

8. Despite softening this year, our optimism index remains above its long‑term average and absolute levels of optimism
continue to improve.
LessoptimisticMoreoptimistic
Chart 5. Business confidence
Net % of CFOs who are more optimistic about financial prospects for their company now than three months ago
-70%
-50%
-30%
-10%
10%
30%
50%
70%
2014
Q2
2013
Q3
2012
Q4
2012
Q1
2011
Q2
2010
Q3
2009
Q4
2009
Q1
2008
Q2
2007
Q3
Expansion is top priority

9. Introducing new products/services or expanding into
new markets is the top priority for CFOs.
Compared to the second quarter, CFOs are placing
greater emphasis on increasing capital expenditure.
While growth has returned to the UK, CFOs continue to
focus on increasing cash flow and reducing costs.
0% 5% 10% 15% 20% 25% 30% 35% 40%
Disposing of assets
Reducing leverage
Raising dividends or share buybacks
Expanding by acquisition
Increasing capital expenditure
Reducing costs
Increasing cash flow
Introducing new products/services or
expanding into new markets
Chart 6. 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
35%
32%
31%
19%
13%
10%
9%
6%
2014 Q3
Expansion is top priority

10. Chart 7. Fixed capital investment and private sector employment
Growth in fixed capital formation (%YoY, 2Q moving average) and growth in private sector employment (% YoY)
35%
32%
31%
19%
13%
-25
-20
-15
-10
-5
0
5
10
15
2014201320122011201020092008200720062005
-10
-8
-6
-4
-2
0
2
4
6
DecreaseIncrease
Fixed capital
investment (LHS)
Private sector
employment (RHS)
Source: Thomson Reuters Datastream
Corporates optimistic about profits
Fixed capital investment has risen by 9.6% in the last year and private sector employment, after excluding the effects
of reclassifications of some major employers, has risen by 3.2%.

11. DecreaseIncrease
-100%
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
2014
Q3
2014
Q1
2013
Q3
2013
Q1
2012
Q3
2012
Q1
2011
Q3
2011
Q1
2010
Q3
Revenues
Chart 8. Outlook for corporate revenues and margins
Net % of CFOs who expect UK corporates’ revenues and margins to increase over the next 12 months
Operating margins
Corporates remain optimistic about profitability. CFO expectations for growth in revenues and operating
margins remain close to four‑year highs.
Corporates optimistic about profits

12. On balance, CFOs rate UK corporate balance sheets as underleveraged.
UnderleveragedOverleveraged
Chart 9. Attitudes to leverage
Net % of CFOs who think UK corporate balance sheets are overleveraged
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
2014
Q3
2014
Q1
2013
Q3
2013
Q1
2012
Q3
2012
Q1
2011
Q3
2011
Q1
2010
Q2
2010
Q1
2009
Q3
2009
Q1
2008
Q3
2008
Q1
2007
Q3
Corporates optimistic about profits

13. A period of sharply declining lending to corporates
seems to be coming to an end.
Official data show that the flow of credit to private
non‑financial corporations has turned positive for the
first time in five years.
Chart 10. Lending to corporate sector
Growth in bank and building society lending to private non-financial corporations (% YoY)
35%
32%
31%
19%
13%-10
-5
0
5
10
15
20
25
201420122010200820062004200220001998199619941992
Source: Thomson Reuters Datastream
Public policy appropriate

14. 2014 Q3
Chart 11. Policy appropriateness index
% of CFOs reporting that current policy settings in the following areas
are appropriate for the long-term success of businesses in the UK
2012 Q4
40%
0% 20% 40% 60% 80% 100%
General levels of regulation
affecting business
Infrastructure
Energy policy
Education & training
Urban and town planning
Immigration policy
Financial regulation
Public expenditure
Taxation policy
Labour market
Monetary policy (including
interest rates, inflation and
the availability of credit)
97%
91%
94%
88%
90%
75%
89%
58%
82%
69%
73%
60%
71%
65%
70%
69%
64%
59%
59%
58%
58%
45%
We asked CFOs to rate the appropriateness
of official policy across 11 areas, repeating
a question we asked in 2012 at the trough of
the UK’s double‑dip slowdown. On average,
77% of CFOs rate policy as being appropriate
across the areas, up from 67% in 2012.
Confidence has risen across all areas with the
largest improvements in the approval ratings
on public spending, tax policy, immigration
policy and financial regulation. The Bank of
England gets the strongest vote of confidence,
with 97% of CFOs rating monetary policy,
including the availability of credit and inflation,
as appropriate.
Public policy appropriate

15. CFOs’ inflation expectations have fallen since the first quarter. An overwhelming majority, 80%, expect CPI inflation
to hover around the Bank of England’s 2.0% target in two years’ time. The proportion who expect inflation to
overshoot its target has almost halved, from 20% to 11%.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Above 3.5%2.5%-3.5%1.5%-2.5%0-1.5%Below zero
0% 0%
0% 0%
9%
5%
80%
75%
11%
20%
Chart 12. Inflation expectations
% of CFOs who expect consumer price inflation in the UK to lie between the following ranges in two years’ time
2014 Q1 2014 Q2
Public policy appropriate

16. Easy financing conditions
Financing conditions continue to improve for the large
corporates on our survey panel.
CFOs report credit as being cheaper and more easily
available now than at any time in the last seven years.
-100%
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
2014
Q3
14
Q1
13
Q3
13
Q1
12
Q3
12
Q1
11
Q3
11
Q1
10
Q3
10
Q1
09
Q3
09
Q1
08
Q3
08
Q1
2007
Q3
CreditischeapCreditiscostly
CreditishardtogetCreditisavailable
-100%
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
Cost of credit (LHS)
Chart 13. Cost and availability of credit
Net % of CFOs reporting credit is costly and credit is easily available
Availability of credit
(RHS)

17. Chart 14 compares the effect of nine key
factors on corporate investment plans between
Q1 2014 and now.
Uncertainty remains the largest, and a growing,
constraint on investment plans. Weakness in
the euro area is also weighing on investment.
The main drivers of investment are easy access
to finance, the strength of the UK economy
and rising demand for businesses’ products
and services.
Chart 14. Factors affecting corporate investment plans
CFOs’ assessment of the effect of each of the following factors on their investment plans
On a 10-point scale where 0 implies the most negative effect and 10 the most positive
2
3
0
1
4
5
6
7
8
9
10
Actual or expected levels
of econimic activity/GDP
growth in the euro area
Fiscal consolidation
in UK (tax rises,
cuts in public
spending)
Actual or expected
levels of economic
activity/GDP growth
in emerging market
Availability of finance
2014 Q32014 Q1
Actual or expected levels of economic
activity/GDP growth in the rest of the
world (including the US, Japan and
Asia-Pacific)
Actual or
expected
levels of
economic
activity/
GDP growth
in the UK
Cost and
availability
of external
finance
Secular or long term
growth for your
products or services
Uncertainity about the economic and
financial environment
Morepositive
2014 Q1
2014 Q3
Easy financing conditions

18. The macroeconomic backdrop to the Deloitte
CFO Survey Q3 2014
UK activity remained strong, with output rising above its
pre‑crisis peak and unemployment falling to a six‑year
low. The Bank of England signalled that it anticipates
a slowing of UK activity towards the end of the year as
the effects of sterling strength and weakness in the euro
area kick in. Euro area growth remained disappointingly
weak and fears of deflation grew. The European Central
Bank announced further measures to support lending
including the introduction of negative deposit rates for
the first time. US economic activity rebounded in the
second quarter bolstering sentiment about the world’s
largest economy.
Geopolitical uncertainties surrounding the conflicts in
the Ukraine and the Middle East moved centre stage.
In Scotland, support for independence rose in the month
before the September 18th vote. In the referendum
55% of voters chose to stay in the United Kingdom.
Financial markets remained generally strong, with the
S&P 500 reaching new record highs and risk assets
rallying in Europe on hopes of further monetary easing.
CFO Survey: Economic and financial context

19. Quarter-on-quarter
growth
Year-on-year
growth
201520142013201220112010200920082007
-8
-6
-4
-2
0
2
4
6
Forecasts
UK GDP growth: Actual and forecast (%)
Source: ONS, consensus forecasts from The Economist and Deloitte calculations
UK recovery steady
CFO Survey: Economic and financial context

20. CFO Survey: Economic and financial context
FTSE 100 price index
Source: Thomson Reuters Datastream
3,000
3,500
4,000
4,500
5,000
5,500
6,000
6,500
7,000
2014201320122011201020092008
Buoyant FTSE 100

21. Private-sector hiring
outpacing public-sector job cuts
Public sector
UK private and public sector job growth (thousands)
Source: Thomson Reuters Datastream
Private sector
-300
-200
-100
0
100
200
300
400
500
Q4
2013
Q1
2013
Q2
2012
Q3
2011
Q4
2010
Q1
2010
Q2
2009
Q3
2008
Q4
2007
Q1
2007
-300
-200
-100
0
100
200
300
400
500
CFO Survey: Economic and financial context

22. CFO Survey: Economic and financial context
CPI Inflation well below 2% target
0
1
2
3
4
5
6
7
8
9
UK annual CPI inflation (%)
Source: Thomson Reuters Datastream
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014

23. Two-chart summary of key survey messages
Uncertainty
% of CFOs who rate the level of external financial and
economic uncertainty facing their business as above normal,
high or very high
45%
55%
65%
75%
85%
95%
2014
Q3
2014
Q1
2013
Q3
2013
Q1
2012
Q3
2012
Q1
2011
Q3
2011
Q1
2010
Q3
-100%
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
2014
Q3
2013
Q3
2012
Q3
2011
Q3
2010
Q3
2009
Q3
2008
Q3
2007
Q3
CreditischeapCreditiscostly
CreditishardtogetCreditisavailable
-100%
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
Cost of credit (LHS)
Cost and availability of credit
Net % of CFOs reporting credit is costly and credit is easily
available
Availability of credit
(RHS)

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About the survey
This is the 29th quarterly survey of Chief Financial Officers and Group Finance Directors
of major companies in the UK. The 2014 third quarter survey took place between 8th
and 22nd September. 118 CFOs participated, including the CFOs of 28 FTSE 100 and
40 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 79 UK‑listed companies surveyed is £462 billion, or approximately 20% of the
UK quoted equity market.
The Deloitte CFO Survey 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 Anthea Neagle on 020 7303 0116 or email
aneagle@deloitte.co.uk