UK CEOs delay investments as trade worries reshape strategy

UK CEOs are changing their strategic investment approaches as ongoing geopolitical, macroeconomic and trade uncertainties continue to affect global business operations, findings from the latest EY-Parthenon CEO Outlook survey indicate.

The survey was conducted in April with responses from 100 UK CEOs, reflecting their concerns after US trade tariff announcements. 43% of those surveyed identified geopolitical, macroeconomic and trade uncertainty as the main risk impeding their ability to achieve growth targets in the upcoming year. Additionally, 83% of CEOs reported having delayed a planned investment as a direct consequence of recent trade policy changes.

Almost half of the respondents, at 45%, expressed that they were very or extremely concerned about how potential tariff hikes could impact their companies' operations and revenue in the next 12 months. Another 40% described themselves as moderately concerned about the same issue.

Among those who had altered their investment strategies in response to changing trade policies, a quarter said they had completely halted investments, while nearly half, or 49%, have instead chosen to delay planned investment activities. The survey also shows that 39% have moved operational assets to different regions, and 26% made the decision to exit specific geographic markets altogether.

Ongoing US-China trade disputes were cited by 27% of UK CEOs as the most impactful external factor, closely followed by concerns over US-UK trade relations, mentioned by 24% of participants.

In response to rising tariffs, businesses are adapting supply chain strategies in several ways. 48% of CEOs said they plan to diversify their supply chains, shifting production or sourcing to non-tariff regions. Another 44% indicated they are pursuing domestic alternatives and rebuilding local supply networks. The survey found that 42% intend to absorb additional costs through internal operational efficiencies and cost reductions, while 32% said increased costs will be passed on to customers.

Silvia Rindone, EY UK&I Managing Partner for EY-Parthenon, said: "CEOs are navigating an extraordinary combination of structural, political, and economic headwinds that are reshaping the landscape for traditional forecasting. 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."

Despite ongoing challenges, the survey shows a continued focus on deal-making strategies among UK chief executives. The majority, at 97%, expect to actively pursue transactional initiatives in the next year, with 60% specifically targeting mergers and acquisitions (M&A). The drivers behind acquisition interests include securing companies with distinctive technology or intellectual property, cited by 37%, and acquiring complementary businesses to strengthen current capabilities, noted by 35% of respondents.

However, 75% of those surveyed anticipate that a growing valuation gap between buyers and sellers will slow the rate of M&A recovery over the next year. Additionally, 83% of CEOs noted that they are actively incorporating AI-enabled technology into their M&A processes.

Silvia Rindone said: "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. 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."