European business sentiment mixed: Negative interest rates expected for longer in Switzerland - Banking blog


The year started well, with many countries reporting healthy economic growth, the US for example reaching 3.2% and Switzerland 1.7% compared to Q1 2018. But business sentiment is mixed, as the latest Deloitte CFO Survey shows (European results). Overall sentiment among European CFOs has changed little since autumn 2018 and is finely balanced between optimists and pessimists. Financial services (FS) CFOs tend to be pessimistic for most indicators, particularly with regard to margin outlook and risk appetite. Sentiment in Switzerland has weakened across all sectors compared to last autumn, but Swiss CFOs  in all sectors are more optimistic than most of their European peers, as the Swiss results show.

Low margin expectations

While revenue expectations of European FS CFOs are below the average for all sectors, they remain quite optimistic (net balance of 62%). However, not surprisingly perhaps, their margin expectations are among the lowest of all sectors analysed in the survey and quite low overall (net balance 2%), see Chart.

Chart. Expectations for revenues and operating margins

In your view how are revenues and operating margins for your company likely to change over the next 12 months?


Note: This question was worded slightly differently in Finland and the UK

Source: Deloitte CFO Surveys

Low risk appetite:  High uncertainty

Risk appetite is very low across Europe, with only 23% of European CFOs in all sectors considering this to be a good time to take on more risk. FS CFOs show an even lower appetite, with only 16% ready to take on more risk. More than half of all European CFOs consider external economic and financial uncertainty to be high, with FS CFOs the second-highest number after those in manufacturing companies.

Low for longer: Negative interest rates in Switzerland here to stay?

A majority of Swiss CFOs expect negative interest rates to last at least until 2021. 41% expect negative interest rates in two years’ time, 28% expect rates of 0% and 31% expect rates to be in positive territory by then. Recent communications from both the Federal Reserve and the European Central Bank make interest rate increases unlikely in the foreseeable future, and the Fed might well start lowering them again. With the continuing strength of the Swiss Franc, the Swiss National Bank has little leeway to raise rates and has indicated that it is prepared to move deeper into negative territory should this become necessary.

About the Deloitte CFO Surveys

Deloitte conducts CFO Surveys in more than 60 countries. Since 2015, results from European countries have been compiled into a single report, the European CFO Survey. 1,473 CFOs participated in the most recent edition, of which 14% are working for financial service companies. You can find the full results and country comparisons here. The Swiss CFO Survey is the only survey of its kind in Switzerland and has been conducted since 2009. In Switzerland, a total of 102 CFOs took part in the first half-year 2019 survey, representing listed companies and privately-owned firms from every major sector of the Swiss economy. Full results are available here.


Michael Grampp - Research Director & Chief Economist, Communications & Digital

Michael is Deloitte’s Chief Economist in Switzerland. He has been with Deloitte for over ten years and leads the Swiss Research team which produces thought leadership publications and studies. Previously, Michael was a consultant, has also held management positions in various industries and was a startup founder. He has a master’s degree in economics, marketing and a PhD in business administration.


Dennis B

Dennis Brandes - Manager, Research

Dennis is a Research Manager at Deloitte Insight Switzerland in Zurich, specializing on the Swiss economy, the Swiss CFO Survey and the financial services industry. He joined Deloitte in December 2010 after 5 years in the research department of one of the largest Swiss banks, where he had focused on the international aspects of the Swiss economy. Dennis holds a Master Degree in Economics from the University of Basel.



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