Executives halt expansion strategies due to unexpected tariff impact
UK Business Leaders Warn of Growth Threat from Trade Uncertainties and Geopolitical Tensions
Top executives in the UK have voiced their concerns over geopolitical conflicts, particularly the potential impact of tariffs on their companies' growth. A survey by EY-Parthenon revealed that nearly half of UK CEOs are "very or extremely concerned" about the tariff impact on their businesses in the coming year.
The survey found that concerns have led companies to put major investment plans on hold, with 83% of CEOs delaying their planned investments in response to trade developments. Around a quarter have completely halted their plans, and half have delayed them.
The ongoing US trade disputes with China and the UK rank among the top geopolitical concerns for 100 UK company bosses surveyed. The CEOs questioned were predominantly from publicly listed firms with annual revenues of $1 billion or more.
Global markets remain vulnerable to President Donald Trump's statements, as his 'Liberation Day' levies on trading partners have kept them on edge. The US' latest move regarding trade included a threat to impose a 50% tariff on the EU, causing the FTSE 100 to fall by one percent when the news broke on Friday. Although Trump has since withdrawn the threat, investor and business anxieties remain high.
In an effort to mitigate the effects of tariffs, nearly 40% of CEOs have relocated their operations to different geographic regions. One in four CEOs has withdrawn completely from certain markets. To offset additional costs, almost one-third of respondents plan to pass them on to customers by raising prices, while over forty percent aim to absorb the costs internally through operational efficiencies and cost reductions.
Silvia Rindone, EY UK&I managing partner for EY-Parthenon, commented, "Chief executives are navigating an extraordinary combination of structural, political, and economic headwinds that are reshaping the traditional approach to forecasting. In this climate of heightened uncertainty, agility and innovation must underpin strategic decision-making."
In this complex business landscape, marked by economic uncertainty, regulatory changes, supply chain disruptions, and competition in technology and talent, CEOs are adapting their strategies to maximize value for all stakeholders. Confident CEOs are embracing a corporate transformation mindset, using mergers and acquisitions (M&A) and technology as key levers to navigate challenges and position their organizations for sustainable growth. Despite the uncertainties, the imperative for dealmaking remains strong as CEOs seek to unlock long-term value through strategic partnerships or technology adoption.
- The economic impact of trade tariffs has led many UK businesses to suspend their major investment plans, with 83% of CEOs delaying their investments due to trade developments.
- In response to geopolitical tensions, particularly the ongoing US trade disputes, nearly 40% of UK company bosses have relocated their operations to different geographic regions, while one in four has completely withdrawn from certain markets.
- Amidst the uncertainties in the global financial markets, due to statements from President Donald Trump and tariff threats, CEOs are adopting strategic approaches, such as embracing a corporate transformation mindset, using mergers and acquisitions, and technology, to navigate challenges and secure sustainable growth.
