There has been a significant decline in the number of corporate treasurers all over the world who think that the financial crisis is over, according to the EuroFinance Quarterly Global Business Confidence Survey, and a sharp increase in levels of uncertainty about what lies ahead. Globally, they are no longer bullish, on balance, with optimists almost exactly offset by pessimists, looking at the next 12 months as a whole.
And treasurers’ biggest concern now is the difficulty in forecasting their cash flows – even overtaking the state of the economy itself as their number one challenge. This new mood of caution stands in stark contrast to the continuing improvement in the financial background which has seen better credit conditions for companies and a reduction in the number of businesses complaining about the impact of funding constraints.
EuroFinance’s editorial director, Andrew Sawers, said: “It’s starting to look as though we might be reaching a peak, but even the professionals who have a front-row seat on corporate cash flows are struggling to understand which way the economy is going to turn. This is very worrying: uncertainty breeds indecision – and that is ultimately damaging for the economy. There is such a significant increase in the level of uncertainty that, for at least one or two of our survey questions, ‘Don’t know’ was the second-favourite answer.”
Double-dip recession, the Greek euro crisis and fears of contagion, and the problem of huge amounts of government/sovereign debt are the top-rated threats to business, treasurers say.
Treasurers are increasing the emphasis they put on preserving their balance sheet capital and their cash liquidity, while de-emphasising their search for returns on their cash investments. “They are ‘playing it safe’, again,” Sawers explained. “The knock-on effects in terms of investment and expansion could be significant.”
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