BY Fraser Tennant
Business confidence is growing among UK chief executives, despite ongoing geopolitical and macroeconomic challenges, according to a new survey report by EY-Parthenon.
The report, which evaluates chief executives’ capital allocation, investment and transformation strategies, found that 82 percent felt very or somewhat optimistic about the business landscape over the next 12 months, an increase from 67 percent in September 2024.
There is also strong confidence in their companies' performance, notes the report, with 78 percent of chief executives feeling optimistic about revenue growth, 80 percent about profitability and 77 percent about maintaining a competitive position in the next 12 months.
However, despite this optimism, chief executives are cognisant of challenges on the horizon, with 71 percent of survey respondents stating that rapid technological advancements, evolving sustainability agendas and geopolitical tensions will see a shift in compliance being a key strategic factor.
“Our latest ‘CEO Outlook’ reflects a resilient and forward-thinking mindset,” said Silvia Rindone, UK&I managing partner for strategy and transactions at EY. “However, with nearly a quarter citing cost and return on investment as key factors in shaping their digital transformation strategies, it is clear that businesses are seeking a balance between innovation and sustainable growth.”
The EY-Parthenon report also found that UK chief executives plan to undertake transformation initiatives in the next 12 months, prioritising improving customer engagement and retention (45 percent), achieving sustainability targets (43 percent), and optimising operations through digitisation and productivity enhancements (43 percent). “The coming year will be crucial for organisations to refine their transformation approach and unlock long-term value," added Ms Rindone.
Additional findings reveal that the UK remains the top destination for capital investment, with 52 percent of UK chief executives planning to invest domestically over the next year. The US, France, Germany, Canada and Switzerland were all identified as other key investment locations.
Ms Rindone concluded: “With M&A activity set to rebound in 2025, driven by strategic imperatives, digital innovation and a more favourable regulatory climate, business leaders must prioritise diligent, data-driven investment decisions to capitalise on emerging opportunities.”