Deloitte’s latest survey of UK Chief Financial Officers shows that finance leaders see the UK as the most attractive destination when it comes to investment, alongside India, with a net 13% describing it as very or somewhat attractive.

The survey – which took place between 16th and 29th June – is a contrast from the fourth quarter survey of 2024, when the UK came in sixth place, behind the US, India, the Middle East, emerging Europe and Japan.

Richard Houston, senior partner and chief executive of Deloitte UK, said: “These results reveal a shift in sentiment with the UK now viewed as a leading global investment destination. This renewed confidence, coupled with a rise in risk appetite, is welcome and underscores the considerable investment potential the UK offers.”

Business Sentiment Is More Balanced

There was a slight increase in business sentiment overall among CFOs this quarter, with the index of business optimism seeing a modest increase for a second quarter to -11%, compared to -14% last quarter.

CFOs now expect inflation to decline to 2.9% by the middle of next year and expect the Bank of England to lower its base rate to 3.75% over the next 12 months, down from its current rate of 4.25%.

Risk Appetite Improves

This quarter, CFOs reported an uptick in risk appetite with 17% believing that it is a good time to take greater risk onto their balance sheets, compared to 12% last quarter. The survey shows a slight tilt away from defensive strategies for the first time in a year, with CFOs more likely to give priority to expansionary strategies such as introducing new products or expanding into new markets than they have been at any point since the autumn of 2023.

Nonetheless, defensive strategies remain twice as likely to be a strong priority as expansionary ones - with an expansionary strategy on average likely to be a strong priority for 19% of CFOs and a defensive strategy on average a priority for 41% of CFOs.

Geopolitics Remains Top Risk To Business

For the eighth consecutive quarter, geopolitical risk continues to be rated as the top external risk to business. It was assigned its third highest weighted average risk rating3 since the survey first started asking the question in 2018, however the rating has marginally fallen this quarter to 71, from 74 in March.

The percentage of finance chiefs reporting that the level of external uncertainty facing their business is high or very high, has dipped from 46% last quarter to 44%. This is slightly above the long term average of 40%.

Ian Stewart, chief economist at Deloitte UK, said: “Despite conflict in the Middle East and volatility in oil prices levels of concern about geopolitical risk fell slightly in the second quarter. This may reflect an easing of concerns around trade in the light of the UK-US trade deal announced in early May.”