As geopolitical tensions, macroeconomic fluctuations, and precarious trade conditions loom over global markets, many CEOs are recalibrating their strategic investment plans. The latest EY-Parthenon CEO Outlook survey reveals that 43% of 100 UK CEOs surveyed perceive these uncertainties as the predominant risk affecting their growth targets for the forthcoming year. Notably, 83% of respondents have opted to delay planned investments in response to recent shifts in trade policy.
The survey highlights a marked concern regarding potential tariff increases, with 45% of CEOs expressing significant anxiety over how such changes could impact their operations and sales. In light of these challenges, strategic adjustments have become essential, with 83% of these leaders recognising the need to realign their investment strategies. Of that group, a quarter have completely halted their investment plans, while nearly half (49%) have opted for a delay. Moreover, 39% reported relocating operational assets to other regions, and 26% have withdrawn from certain geographical markets entirely.
The consequences of the ongoing trade disputes, particularly between the US and China and the US and UK, are not lost on these business leaders. Approximately 27% cited US-China tensions and 24% articulated their concerns over US-UK disputes as critical issues affecting their business activities. The complexity of these dynamics is forcing UK CEOs to adopt proactive measures. Almost half (48%) are diversifying their supply chains by reallocating production or sourcing to non-tariff regions, while 44% are exploring options for domestic sourcing as they rebuild their supply networks locally. Complicated by the need to absorb rising costs, 42% are looking to implement operational efficiencies, and another 32% anticipate passing these costs onto customers.
In navigating these turbulent waters, Silvia Rindone, EY UK&I Managing Partner, emphasised the necessity for agility and innovation in strategic decision-making. She stated, “CEOs are navigating an extraordinary combination of structural, political, and economic headwinds that are reshaping the landscape for traditional forecasting.” Rindone highlighted that the ability to adapt—whether by diversifying supply chains or leveraging technology—will be paramount for organisations aiming to weather current disruptions and build resilience moving forward.
Looking ahead, optimism persists among these executives: 97% anticipate seeking transactional opportunities within the next year, with 60% focusing on mergers and acquisitions (M&A). The imperative for acquiring technology or intellectual property remains prominent, with 37% of respondents indicating such targets, alongside 35% expressing interest in acquiring complementary businesses to bolster capabilities.
However, a notable concern has emerged regarding M&A interactions, as three-quarters of surveyed CEOs acknowledge a widening valuation gap between buyers and sellers. This disparity is expected to hinder the recovery of M&A activity over the coming year. It is worth noting that 83% are actively integrating AI-enabled technologies into their M&A processes, demonstrating a shift towards more sophisticated operational capabilities amid these uncertainties.
Despite the pervasive challenges, the appetite for strategic growth persists among UK CEOs. Rindone remarked on the potential long-term benefits, stating, “CEOs and companies that can remain strategically focused while others pull back could emerge stronger with a better market position and faster growth once the economy recovers.”
As UK companies navigate these complex interdependencies in a landscape fraught with uncertainty, leaders must maintain a forward-looking perspective that prioritises adaptability and strategic foresight to safeguard their competitive positions.
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Source: Noah Wire Services
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