Public mistrust of business and political leaders is having a detrimental impact on the business environment suggests the latest Duke University/CFO Magazine Global Business Outlook Survey, which is supported by ACCA (the Association of Chartered Certified Accountants).
The survey, one of the world’s longest running quarterly surveys of finance leaders, found that public distrust was most keenly felt in Latin America, with 79 per cent of Chief Financial Officer respondents believing public mistrust was having a negative effect on the economy. Equivalent figures for other regions of the world were Asia (71 per cent), Europe (68 per cent), Africa (64 per cent) and 60 per cent of US finance leaders identifying this as an issue.
The survey also suggests many businesses are continuing to maintain cash reserves, particularly in the US and Europe but that greater appetite for cash spending is apparent with Asian, African, and Latin American enterprises. US and European firms are evenly split on whether or not they will deploy cash reserves this year, but a greater proportion, 60–70 percent of Asia, Africa and Latin American finance executives are likely to spend.
Jamie Lyon, head of corporate sector at ACCA, said: ‘The survey suggests a multitude of different spending priorities for finance leaders, from capital spending, reducing debt or new acquisitions to support growth, but there also remains some hesitancy as well with concerns over tightening credit markets. The concern amongst CFOs across the world over growing public distrust and its consequential impact on the economy tells us that not only are finance leaders more attuned to public sentiment and its impact on the businesses they operate in, it also shows the vulnerability of businesses to public perceptions and political leadership.’
The survey also draws out key CFO concerns in Latin America, Africa and China with labour challenges, such as strikes and work stoppges, particularly amongst executives in Brazil (85 per cent) and Chile (68 per cent). Whilst half of African finance executives also see disruption due to employee unrest, and almost 30 per cent of Chinese finance leaders expressing similar concerns. European and US leaders are however less concerned.
Jamie Lyon said: ‘We have seen more challenges facing the emerging economies in terms of growth lately, and these labour issues could compound some of these challenges further. They are more vulnerable at the moment, and strikes and so on will have a bigger impact on businesses in those markets than, say, in the US, where the survey showed just 9 per cent of finance chiefs were concerned about labour unrest.’
The survey also identifies a number of other issues concerning finance executives. For those representing organisations with Russian interests, the survey suggests the threat of sanctions is considered to be potentially detrimental to expected business performance with some already changing their business plans and exposure to the market in response. European CFOs are citing some concerns over deflation, and Latin American finance chiefs in particular see governmental policies as a major concern for the forthcoming year.