By Jason Douglas

LONDON--U.K. business confidence rose in the fourth quarter of 2016 to the highest level in 18 months, according to a closely watched survey published Thursday, with the risk of a messy European Union divorce executives' biggest worry for the year ahead.

Deloitte LLP said the reading, which was based on a survey of chief financial officers of large U.K. companies, was a reflection of stronger-than-expected economic growth.

The U.K.'s Office for National Statistics estimated last week that the economy grew in the third quarter at an annualized rate of 2.3%, a faster pace than initially indicated.

Deloitte said executives remain on the defensive however. Trimming costs and boosting cash flow were CFO's top priorities for the year ahead. The outlook for investment and hiring improved in the final quarter, but remained muted, amid uncertainty about the long-term prospects for the U.K. and global economy, the survey found.

Brexit was listed as executives' biggest concern. U.K. Prime Minister Theresa May has said she will formally kick off the Brexit process before the end of March, starting exit talks with the EU that are expected to last at least two years.

Deloitte said 119 CFOs participated in the survey, with the majority from FTSE 100- and FTSE 250-listed companies.

-Write to Jason Douglas at jason.douglas@wsj.com

(END) Dow Jones Newswires

December 28, 2016 19:15 ET (00:15 GMT)

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