UK firms lose taste for US investment, Deloitte survey shows

A recent Deloitte survey indicates a significant decline in the United States' attractiveness as an investment destination for British chief financial officers, with the net balance plummeting from +59% in late 2024 to just +2%. This shift coincides with a sharp drop in US foreign direct investment in early 2025 and heightened business uncertainty over former President Trump's tariff plans. Conversely, British executives now view their domestic market more favorably, with the UK's investment attractiveness balance rising to +13%, positioning it as a leading global destination alongside India, signaling a notable reallocation of investment sentiment among major British firms.

Analysis

A Deloitte survey of major British firms reveals a dramatic shift in investment sentiment, with the United States' attractiveness as a destination plummeting significantly. The net balance of UK CFOs viewing the U.S. as an attractive place to invest fell from +59% in late 2024 to just +2%, a decline that correlates with heightened uncertainty over former President Trump's tariff plans and a documented drop in U.S. foreign direct investment in early 2025. Conversely, sentiment towards the domestic UK market has seen a notable reversal, with its attractiveness balance rising from a negative 12% to a positive 13%, placing it on par with India as a top investment destination for these executives. This renewed domestic confidence, however, exists alongside a still-subdued overall business optimism index of -11% and expectations of weak economic growth. Despite the steep decline, the U.S. remains a more favorable investment destination than developed Europe or China, both of which registered negative readings in the survey.

Key Decisions for Investors

• Investors should re-evaluate the geographic revenue mix and capital expenditure plans of UK-based multinational firms, as the sharp decline in C-suite sentiment towards the US may foreshadow a pullback in transatlantic investment.
• The improved outlook for the UK as an investment destination, with a net balance of +13%, could create domestic opportunities, but this must be weighed against risks from weak underlying economic growth and potential fiscal tightening.
• Monitor US trade policy and UK budget announcements closely, as the survey indicates these are critical drivers of capital allocation decisions and any changes could rapidly shift the current sentiment.