The United Kingdom has successfully defended its status as a premier destination for international capital, according to a major new industry survey. However, its position is under increasing pressure from rival economies.
Global Standing and Rising Competition
The latest annual survey from professional services giant PwC shows that the UK held onto its rank as the world's second-most attractive investment destination for chief executives in 2025. Yet, it now shares that silver medal position with both Germany and India, highlighting a more competitive landscape.
All three nations were selected by 13 per cent of global CEOs as locations likely to receive the greatest share of investment in 2026. This marks a subtle shift from the previous year, representing a one percentage point drop for the UK and a corresponding one point rise for Germany. India saw the most dramatic climb, jumping from seven per cent to 13 per cent. The United States maintained a commanding lead in first place, chosen by 35 per cent of business leaders.
Economic Headwinds and Strategic Responses
This retention of a top-tier ranking comes against a backdrop of heightened economic concern within the UK. A quarter of British chief executives now expect the domestic economy to contract over the next twelve months, a significant increase from just 13 per cent who held that pessimistic view in 2025.
In response to the fiercer international competition, the UK has actively pursued trade agreements to bolster its global standing. Key deals include the landmark UK-India Free Trade Agreement signed in July 2025, designed to boost commerce by cutting tariffs on goods like whisky and cars. The UK-US economic partnership, which provided tariff relief on British steel, is another strategic pillar.
Marco Amitrano, senior partner of PwC UK, commented on the findings. "Being the world’s second-most important investment destination for a second-year running should not be underestimated," he said. "It demonstrates that the UK still looks stable in a turbulent world. But in now sharing that position it’s also a wake-up call—other countries are gaining ground. As a leading nation, this now points to the need to step up our game, with government and business working together." Amitrano added that falling inflation could help lay the groundwork for supporting key growth sectors.
Business Sentiment: Tariffs, AI, and Growth Confidence
The survey revealed several nuanced insights into the mindset of UK business leaders. Notably, UK chief executives feel less exposed to tariffs, macroeconomic volatility, and geopolitical conflict than their international peers. Only one in ten British executives believe their businesses are significantly exposed to tariffs, which is half the global average.
Similarly, just 11 per cent of UK bosses feel considerably exposed to inflation, down five percentage points from the prior year and well below the global figure of 25 per cent. While concerns about geopolitical conflict also declined from 16 per cent to 10 per cent, over half of UK leaders plan to enhance their cybersecurity in response to such risks.
Investment in technology is a clear priority, with over 80 per cent of UK businesses citing increased spending on technology, AI, and data as a top focus, up sharply from 60 per cent last year. Despite this commitment, tangible returns remain elusive. Only 21 per cent of UK firms reported revenue growth from AI in the past 12 months. While other countries reported higher revenue gains (29 per cent), they also admitted to incurring higher AI-related costs.
Confidence in short-term revenue growth has hit a five-year low in the UK, with only 38 per cent of executives expressing high confidence. Bosses attributed this lack of faith to "bureaucracy and cumbersome structures" that stifle innovation. However, the long-term outlook is brighter, with 51 per cent predicting revenue growth over the next three years.
Amitrano noted the friction caused by slow-moving structures: "The speed of tech change is exposing excessive bureaucracy and overly rigid structures, things that can hamper transformation at pace. Those sources of friction are reasons preventing businesses getting important early returns on their investment in AI, slowing down its effectiveness."
