Geopolitical Risk 2026: How UK CEOs Must Rebalance Investment
78% of UK CEOs have altered their investment strategy in response to geopolitical and trade policy shifts in 2026 — delaying, accelerating or stopping planned spend. Capital allocation is now a live geopolitical risk decision, not a fixed annual plan.
According to EY’s survey of 100 UK CEOs, 32% have delayed a planned investment, 31% have accelerated one, and 9% have stopped an investment outright because of geopolitical or trade policy developments. Despite this, confidence has not collapsed: according to the same survey, 9 in 10 UK CEOs feel confident about their company’s prospects over the next 12 months, with 89% expecting profitability growth in 2026.
Why are CEOs treating capital allocation as a geopolitical decision now?
Trade policy shifts, tariff uncertainty and shifting alliances have made the timing and location of capital deployment as consequential as the investment case itself. A project with a strong return can still be the wrong call if it is exposed to a jurisdiction facing new tariffs or export controls. CEOs are responding by building geopolitical scenario testing directly into investment committee papers, rather than treating it as a separate risk function exercise conducted after the capital decision has effectively been made.
Executive Action:
- Embed geopolitical scenario testing directly into investment committee papers
- Re-score in-flight capital projects against current trade policy exposure
- Set a standing quarterly review of investment strategy against geopolitical developments
How are CEOs balancing AI investment against this uncertainty?
Rather than pulling back, CEOs are treating AI and technology investment as a hedge against geopolitical disruption. According to EY, 96% of UK CEOs will be investing in AI technology in the next 12 months, and 40% view AI investment as critical to navigating geopolitical and economic disruption specifically — automating supply chain visibility, scenario modelling and workforce flexibility faster than competitors. This marks a shift from viewing AI purely as an efficiency play to treating it as strategic insurance against volatility.
Executive Action:
- Reframe AI investment cases around resilience and scenario-response speed, not just efficiency
- Prioritise AI use cases that improve supply chain and geopolitical visibility
- Protect AI investment budgets from broader capital deferrals where they de-risk the business
Why are CEOs turning to joint ventures instead of full-scale investment?
According to EY, 83% of UK CEOs are considering joint ventures or strategic alliances with third parties as a way to access new capabilities and technology without committing to the full capital exposure of an acquisition or standalone build. This lets CEOs move quickly on strategic priorities while keeping capital flexible enough to respond if trade conditions shift again. It also reflects the reality that 57% of UK CEOs are already running a significant enterprise-wide transformation, with a further 41% planning to start one within 12 months — few have the balance sheet capacity for large-scale M&A on top.
Executive Action:
- Evaluate joint ventures and alliances for any capability gap before committing to full acquisition
- Sequence new transformation initiatives against existing programme capacity
- Brief the board on which strategic priorities are being pursued via partnership rather than owned investment
What should CEOs put in front of the board on rising costs?
47% of UK CEOs anticipate increases in operating costs in 2026 even as they expect profitability growth — a combination that requires the board to understand where margin is being protected through pricing, productivity or portfolio choices, rather than assuming growth and cost pressure cancel out on their own. Boards should expect explicit trade-off decisions, not blended averages, when CEOs present 2026 investment plans.
Executive Action:
- Present the board with explicit margin trade-off decisions, not blended cost-growth averages
- Identify which cost increases are geopolitical versus operational in origin
CEOs rebuilding investment plans around geopolitical uncertainty can use INFORMD’s capital approval assessment template and the executive self-assessments to stress-test capital allocation decisions. INFORMD’s executive briefings library tracks how UK CEO strategy is evolving through 2026.
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According to EY’s survey of 100 UK CEOs, 78% have altered their investment strategy — 32% delaying, 31% accelerating and 9% stopping a planned investment due to geopolitical or trade policy developments.
Yes. 96% of UK CEOs plan to invest in AI technology over the next 12 months, with 40% viewing AI investment as critical to navigating geopolitical and economic disruption specifically.
83% of UK CEOs are considering joint ventures or strategic alliances to access new capabilities and technology with more flexibility and less capital exposure than a full acquisition or standalone build.
Yes. 9 in 10 UK CEOs feel confident about their company’s prospects over the next 12 months, and 89% expect profitability growth in 2026, even as 47% anticipate rising operating costs.
