Deloitte’s second quarter CFO Survey, conducted in the second half of June, shows a surprising degree of resilience among the largest corporates in the UK. Despite the conflict between Israel and Iran, volatility in oil prices and the threat of US tariffs, CFO sentiment and risk appetite have edged up slightly. The survey is available at:
https://www.deloitte.com/uk/en/services/consulting-financial/perspectives/deloitte-cfo-survey.html
UK CFOs have also become markedly more positive about the UK as a destination for investment. Last December CFOs rated the UK in fifth place out of a field of eight nations and regions as a place to invest, with the US, by a considerable margin, the most favoured destination. This has all changed. Now CFOs rate the UK, along with India, as their preferred investment destinations. Sentiment about investing in developed Europe has risen while the US has seen a precipitous drop in its ranking, falling from first to sixth place.
The decline in the perceived attractiveness of the US comes after significant downgrades to US growth forecasts in the first half of this year amid concerns about the effect of US tariffs. US assets performed poorly in the first half of 2025, with the US dollar falling by 10% on a trade-weighted basis and US equities underperforming European equities.
Although tariffs remain a material business risk, the announcement of a limited trade agreement between the US and UK in early May, the only one confirmed at the time of the survey, provides greater certainty for UK businesses. Improving CFO sentiment about developed Europe may partly reflect expectations that rising defence spending and EU-wide economic reform in the wake of the Letta and Draghi Reports will boost European growth. According to the latest Bank of America survey, institutional fund managers have pivoted decisively from US to euro area equities, underscoring growing optimism about the region in capital markets. Sentiment about the UK has also improved, but to a lesser extent.
The findings from the CFO survey fit with a small increase in business sentiment recorded in the latest CBI quarterly survey and a pickup in activity recorded in the June survey of purchasing managers. A swift return to more normal rates of growth in the UK is not on the cards. These surveys suggest weak, although continued UK growth in the coming months. Given the headwinds from geopolitical uncertainty and tariffs, things could be worse.