Finance chiefs recover their appetite for risk

Surge is being driven by a rebounding US economy, strong UK growth and easy access to finance

UK finance chiefs are more willing to take risks than at any time since the dawn of the financial crisis amid economic recovery and easing credit conditions, according to Deloitte.

The financial services firm’s quarterly snapshot of more than 100 chief financial officers at FTSE 350 businesses and large private firms found risk appetite at its highest since 2007, despite threats such as the deteriorating eurozone economy and uncertainties over next year’s general election.

The surge is being driven by a rebounding US economy, strong UK growth and easy access to finance, according to Deloitte. Nearly three quarters of finance chiefs – 72 per cent – believe now is a good time to take risk on to balance sheets, up from 65 per cent in the second quarter of the year and more than three times higher than two years ago.

The findings will be a boon to the Bank of England’s rate-setters who are looking for business investment to sustain a recovery so far largely dependent on consumer spending and the housing market during the past 18 months. The Bank’s Monetary Policy Committee is currently weighing when to raise interest rates for the first time in seven years with a first move pencilled in for early next year.

But despite any economic improvement, young people will continue to feel an intense squeeze on their living standards, the EY Item Club forecasts in a report released today.

The forecaster says the youth unemployment rate is set to remain “well above” the overall jobless rate over the coming years.

The Item Club also expects that people aged 16 to 24 will face the need to save ever larger sums to buy a house as prices continue to increase. Higher university tuition fees will also curb disposable incomes among the group.

The 16-24 unemployment rate dropped 16.6 per cent in the three months to July, down from 18.5 per cent in the previous quarter and a peak of 22 per cent in 2011. But the present rate is still higher than pre-crisis average levels of average 13.8 per cent and the current overall jobless rate of 6.2 per cent.