Deloitte CFO Survey Q3: Economic and political uncertainty seen as the greatest constraint on UK competitiveness

• Geopolitics now tops the CFO risk list for more than three years; 
• CFOs expect inflation and interest rate rises as the cost of credit hits a two-and-a-half year high;
• Cost reduction remains CFOs' top business priority, with expansionary strategies losing favour;
• 67% of finance chiefs believe their organisations are around a quarter of the way through their AI adoption.

Deloitte’s latest survey of UK Chief Financial Officers (CFOs), conducted between 17 September and 1 October, shows that domestic economic and political uncertainty are seen as the biggest constraint on UK competitiveness.

CFOs were asked to assess the different factors that may be limiting the UK’s competitiveness, and regulation and taxation ranked the second and third biggest constraints respectively following domestic uncertainty. Energy and labour costs ranked fourth and fifth, above other factors such as the trade relationship with Europe and transport infrastructure.*

Debapratim De, chief economist at Deloitte UK, said: “A decade of leadership turnovers, growing political fragmentation and near-constant speculation on tax policy has clouded the backdrop for business. As the Chancellor prepares to deliver his first Budget, businesses are looking for policy stability, deregulation, and lower, simpler taxes to underpin improved UK competitiveness.”

Geopolitics loom large

When asked to rate the risk posed to their businesses by a range of external factors on a scale of 0-100, CFOs continue to rank geopolitics as the greatest risk, with an average score of 67 (68 in Q2). It has now topped the list of business risks for more than three years.**

The prospect of further rate rises and a general tightening of monetary conditions in the UK and US ranked second, with an average score of 65, up from 59 in Q2.

CFOs favour defensive stance

CFOs have revised their expectations for both inflation and interest rates over the next 12 months. They now expect inflation to be 3.4% in a year's time, up from 3.0% in the previous survey, while expectations for the Bank of England interest rate have risen to 4.0%, compared with the current rate of 3.75%.

Against this backdrop, CFOs continue to favour defensive business strategies. Cost reduction remains the top priority, with 68% rating it as a strong priority over the next 12 months, up from 53% in Q2. Enthusiasm for expansionary strategies has also weakened, with fewer prioritising the introduction of new products and services (27%, down from 37% in Q2) and expansion through acquisition (16%, down from 22% in Q2).

AI adoption remains in its early stages

When asked about the progress businesses are making on AI adoption, two-thirds (67%) of CFOs assess their organisations to be around a quarter of the way towards achieving the transformation they expect AI to ultimately deliver.

Despite this, they expect AI to have a significant impact on business performance in the short term. Over a third (37%) expect AI to boost their businesses’ margins over the next 12 months, while 48% expect it to reduce operating costs and 52% anticipate that it will reduce headcount in their own business over the next 12 months.

Darren Graves, Deloitte UK CEO, added: “While CFOs are facing an uncertain economic environment, they are increasingly confident in AI’s potential to drive productivity and performance. Capturing that potential will take more than adopting new technology. The organisations that thrive will be those that consciously shape how AI is used, combining its power and speed with human judgement, experience and trust. The opportunity is not simply to automate today’s work, but to rethink how work gets done, strengthen decision-making and create new sources of growth.”

ENDS

Notes to editors

* The nine constraints on UK competitiveness we rank are (weighted average ratings on a scale of 0-100 where 0 stands for not a constraint and 100 stands for a significant constraint):

• Domestic economic and political uncertainty - (78)
• Regulation (planning, employment and industry-specific) – (75)
• Levels and complexity of taxation – (67)
• Energy costs – (61)
• Labour costs – (56)
• Trade relationship with Europe – (39)
• Workforce skills and shortages – (37)
• Cost and availability of finance – (31)
• Transport infrastructure – (30)

**The 12 risk areas tracked in the survey are (Weighted average ratings on a scale of 0-100 where 0 stands for no risk and 100 stands for the highest possible risk):

• Rising geopolitical risks worldwide including greater protectionism – (67)
• The prospect of further rate rises and a general tightening of monetary conditions in the UK and US – (65)
• Higher energy prices or disruption to energy supplies – (62)
• The risk of higher inflation and/or a bubble in housing and other real and financial assets – (60)
• Poor productivity/weak competitiveness in the UK economy – (57)
• Medium-term supply chain disruption – (48)
• Economic weakness and/or volatility in US growth – (46)
• Long-term effects of climate change – (43)
• Economic weakness in the euro area, and the possibility of a renewed euro crisis – (39)
• Persistent labour shortages – (35)
• Weakness and/or volatility in emerging markets – (30)
• Effects of Brexit/deterioration in UK-EU relations – (30)

About the survey

Conducted between 17 September and 1 October, the Q3 2026 Survey is the 77th quarterly survey of Chief Financial Officers and Group Finance Directors of major companies in the UK.

Overall, 66 CFOs participated, including the CFOs of 12 FTSE 100 companies and 25 FTSE 250 companies. The rest were CFOs of other UK listed companies, large private companies and UK subsidiaries of major companies listed overseas.

The Deloitte CFO Survey is the only survey of major corporate users of capital that gauges attitudes to valuations, risk and financing.

For copies of previous CFO surveys, please see here.