The tariff shock and the sentiment break

Between Q1 and Q2 2025, the UK CFO Survey’s credit-availability reading swung from +34% to −49%, an 83-point drop in a single quarter and the sharpest move in the series since the 2022 rate shock. The stated cause was global-trade uncertainty. The deal markets told a different story: private-credit deployment kept growing and lender supply did not retreat. For a borrower who reads only the headlines, the risk is mistaking a confidence shock for a credit crunch.

This is the desk’s stock-take on the mid-2025 market. Two readings, from two separate datasets, pointing in opposite directions. The gap between them is the most useful thing a borrower can understand right now.

What happened to CFO sentiment in Q2 2025?

The Deloitte UK CFO Survey has tracked credit availability since 2007. The net balance (the percentage of respondents rating credit as easy to get, minus those rating it as difficult) has seen three distinct regimes over the 2020–2025 window. The first was the Covid liquidity glut: the survey peaked at +65% in Q3 2021, reflecting the extraordinary policy support of that period. The second was the 2022 rate shock: the balance collapsed to −22% in Q4 2022 as the Bank of England lifted rates at their fastest pace in a generation. The third was the 2024 recovery, when the measure climbed back to +41% in Q4 2024 as rates stabilised and deal markets reopened.

Q2 2025 ended that recovery abruptly. From a still-positive +34% in Q1 2025, the balance fell to −49% in a single quarter, a swing larger than any of the individual moves recorded during the rate-shock period itself. The Deloitte survey was fielded through April and May 2025, when US tariff announcements and global-trade uncertainty were at their most acute, and the corporate panels’ response reflected that.

One calibration note on the survey: the Deloitte panel is drawn from roughly 70–130 CFOs and finance directors of large UK companies, predominantly FTSE 100 and FTSE 250 constituents. It is a large-cap mood indicator, not a direct read on the £3–15m lending market. A borrower at the lower-mid-market level should treat the direction of travel as signal and the absolute level as approximate.

Did the supply of capital follow sentiment down?

The short answer is no, and the distinction is structural. Private-credit lenders raise committed capital from institutional investors on fixed investment periods. They do not mark their books to public-market mood. A fund that closed a £2bn vehicle in 2024 still needs to deploy that capital, regardless of what the Deloitte CFO Survey says in April. The result, visible in successive ACC / AIMA Financing the Economy surveys, is that private-credit deployment kept growing through the rate shock, from US$196bn in 2020 to US$333bn in 2023, even as CFO sentiment deteriorated.

That trajectory matters specifically in mid-2025 because it describes the capital base against which a borrower is running a process. The universe of lenders willing to deploy (direct-lending funds, challenger banks, specialist lenders) did not shrink in response to tariff headlines. What changed was the willingness of borrowers to step forward, and the selectivity of lenders who still could afford to be choosy. That is a different problem from a credit crunch, and it has a different solution.

What the gap means when you are the borrower

The divergence between sentiment and supply creates a distinctive market configuration: lenders with capital to deploy are competing for a narrowed pool of borrowers who are willing to act. That configuration reliably favours the prepared borrower. Lender selectivity is a headwind for an unclear credit: one that cannot be explained cleanly, with numbers that raise questions. But for a company with demonstrable cash flow, a coherent plan and a managed process, selectivity is an advantage: the lenders who are still writing tickets are writing them on fewer deals, and competition among them stays live.

The practical implication is narrow and important. Borrowers who pull or delay a process on the basis of the CFO survey number are not responding to a credit market; they are responding to a mood indicator drawn from a panel of large-cap finance directors. A borrower with a £5m refinancing or an acquisition facility to structure is not competing against FTSE sentiment data. They are competing for the attention of the lenders who are actively deploying. In a market where many borrowers have stepped back, that attention is more accessible, not less.

The standing discipline applies here too. Twelve to eighteen months is the planning horizon for a lower-mid-market refinancing; a sentiment break in Q2 2025 is not a reason to compress that window, it is a reason to respect it. The borrower who starts early holds the option to wait; the one who starts at maturity in whatever market exists at the time has already surrendered that option, regardless of what the mood indicators were doing nine months earlier.