UK CEOs are changing course with their investment plans as geopolitical, macroeconomic and trade uncertainties continue to play havoc with global markets, according to fresh research from EY. 

The professional service firm’s latest CEO Outlook survey found that 83% of UK business leaders have already adjusted investment strategies due to trade policy developments in the past few weeks, with 43% identifying global uncertainty as the main risk to their business achieving its growth targets over the next twelve months.

EY’s poll of 100 UK CEOs is further evidence that wildly fluctuating trade policies, coming espcially from the US, are having an impact on British business prospects, with almost half (45%) of all respondents very or extremely concerned about tariff increases impacting their firm’s operations and sales, while another 40% were moderately concerned.

It’s not just UK business leaders feeling the pressure, either, with EY finding that a staggering 98% of global CEOs are concerned about potential tariff impacts.

Respondents highlighted US-China and US-UK trade disputes as being the most consequential to their business activities, with 27% and 24% of UK CEOs, respectively, citing these as major concerns.

Of the UK firms that have changed their strategies in response to the current confusion around trade, a quarter (25%) have halted planned investments, whilst 49% have delayed plans.

Additionally, 39% have relocated operational assets to different geographies, while 26% have exited some regional markets altogether.

To mitigate the potential impact of increased tariffs, the survey indicates that UK CEOs have taken decisive action.

Almost half (48%) plan to diversify their supply chains by shifting production or sourcing to non-tariff regions, while 44% are exploring domestic sourcing alternatives or rebuilding supply networks locally. 

Added to that, 42% said they intend to absorb any additional costs through operational efficiencies and cost reductions, however, almost a third (32%) said they would be forced to pass on cost increases to their customers.

Those figures are in line with CEOs the world over, who reported adapting their growth plans by examining alternative domestic sourcing and supply chain options (44%) and looking at new cost management strategies (42%), as well as exploring innovations in product design that would reduce reliance on tariffed materials (42%).

“CEOs are navigating an extraordinary combination of structural, political, and economic headwinds that are reshaping the landscape for traditional forecasting,” said Silvia Rindone, EY UK&I managing partner for EY-Parthenon.

“In this climate of heightened uncertainty, agility and innovation must underpin strategic decision-making.

“Businesses that embrace adaptability, either by diversifying supply chains or harnessing technology, will be better equipped to manage immediate pressures, such as the current global trade disruption, and build resilience for the future.”

It’s not all bad news, though, as EY’s study found that deal-making remains high on the CEO agenda.

Looking ahead, 97% of UK CEOs expect to actively pursue transaction initiatives over the next year, with 60% focusing on mergers and acquisitions, with UK leaders’ M&A appetites higher than the global average (57%).

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The focus of acquisition strategies includes acquiring companies for their tech and intellectual property (37%), as well as complementary businesses to enhance capabilities (35%).

The survey also highlighted a growing valuation gap between buyers and sellers, which three-quarters (75%) of respondents believe will slow M&A recovery in the next year. It also found that 83% are actively embedding AI-enabled technology in their M&A processes.

“As the long-term impact of global trade disruption plays out, our data shows that many CEOs and executive teams are still exploring a range of strategic options, including M&A, to safeguard their competitive position,” continued Rindone.

“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.”

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