Business confidence amongst UK CEOs is growing, despite ongoing geopolitical and macroeconomic challenges, according to the latest EY-Parthenon CEO Outlook survey.

The survey of 100 UK CEOs, which evaluates optimism levels and provides insights on capital allocation, investment and transformation strategies, found that 82% of UK CEOs felt very or somewhat optimistic about the business landscape over the next 12 months, an increase from 67% in September 2024.

Key Findings:

• UK CEOs are embracing strategic growth opportunities, according to the latest EY-Parthenon CEO Outlook

• UK business leaders are prioritising customer engagement, achieving sustainability targets and digitisation in their transformation efforts

• 62% of respondents said they will be considering M&A activity in the next 12 months

• Over half of UK CEOs (52%) said the UK is their top destination for capital investment

According to the findings, UK CEOs have strong confidence in their companies' performance, with 78% feeling optimistic about revenue growth, 80% about profitability, and 77% about maintaining a competitive position in the next 12 months.

Despite this optimism, UK CEOs are cognisant of challenges on the horizon. Seventy-one per cent (71%) of respondents said that rapid technological advancements, evolving sustainability agendas and geopolitical tensions will see a shift in compliance being a key strategic factor, separating industry leaders from laggards.

Business transformation remains key, but initiatives need to adapt to market trends

The survey found that UK business leaders plan to undertake transformation initiatives in the next 12 months, prioritising improving customer engagement and retention (45%), achieving sustainability targets (43%), and optimising operations through digitisation and productivity enhancements (43%).

However, UK CEOs acknowledge that their transformation approach needs improvement in certain areas. Almost one-in-five (19%) said they need to increase the speed of transformation, whilst a similar number (18%) said they need to improve transformation outcomes through greater collaboration across functions and the c-suite. Almost a quarter (24%) said cost and return on investment (ROI) is influencing its organisation’s approach to digital transformation initiatives.

Silvia Rindone, UK&I Managing Partner for Strategy and Transactions, commented: “Our latest CEO Outlook reflects a resilient and forward-thinking mindset among UK CEOs. However, with nearly a quarter citing cost and ROI as key factors in shaping their digital transformation strategies, it’s clear that businesses are seeking a balance between innovation and sustainable growth."

"The coming year will be crucial for organisations to refine their transformation approach and unlock long-term value."

Dealmaking expected to rise in 2025 as the UK remains the top investment destination

Nearly all respondents (99%) said they expect to actively pursue transaction initiatives over the next 12 months. Of these, 62% said they will be looking at M&A – up from 40% in September 2024. Three in five (62%) intend to pursue joint ventures or strategic alliances with third parties, and 45% say they will consider divestments, spin-offs or IPOs. The top priority for UK CEOs when evaluating a potential acquisition is whether it improves product and process innovation with 46% of respondents identifying it as one of their key priorities.

The UK remains the top destination for capital investment, with 52% of UK CEOs planning to invest domestically over the next year. The United States (20%), France (18%), Germany (16%), and Canada and Switzerland (14% each) were all identified as other key investment locations.

Silvia Rindone added: “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.”