KPMG 2025 CEO Outlook – UK

While global headwinds are still creating a tough trading environment, the results of our 2025 CEO Outlook paint a picture of UK corporate leaders who are positive about the prospects for growth, with 83% saying they’re confident or very confident about the growth prospects for their industry over the next three years. That’s up 7 percentage points on last year. This year, 64% of UK chief executives say they’re expecting an increase in their organisation’s earnings over the next three years of 2.5% or more. That compares to just 48% in 2024.

They’re not feeling as positive about the global economy though – 65% say they’re confident, compared to 70% in 2024. That’s likely driven by geopolitical instability and this year’s headlines around US tariffs – which is reflected in our findings. Levels of confidence in the global economy across our full global sample are at their lowest since 2021.

While they’re relatively optimistic about growth, UK CEOs are feeling the strain of navigating a world that’s rife with complexity and disruption. Almost three-fifths (79%) of UK chief executives say they feel under more pressure to ensure the long-term prosperity of their business. It was just under two-thirds (63%) in 2024.

Top of the challenges keeping CEOs up at night is supply chain resilience, followed closely by global economic uncertainty. But they’re also faced with the challenge of integrating AI into their organisations and the impact that’s having on their people. And despite increasingly polarised global views on ESG, climate change remains a key concern for UK business leaders.

Cybersecurity doesn’t feature in UK CEOs’ top 5 immediate challenges this year. But, following many high-profile cyberattacks in 2025, it’s still high on their agenda – 80% of UK chief executives say cybercrime and cyber insecurity will impact their organisation’s prosperity over the next three years.

To mitigate the most pressing risks, UK CEOs have prioritised increasing investment in AI integration into operations and workflow (39%), regulatory compliance and reporting (34%) and cybersecurity and digital risks resilience (32%).

As chief executives strive to embed resilience in the face of complex and interrelated pressures, they’ve had to reassess their strategies for growth. Almost three-quarters (71%) of UK CEOs say they’ve already adapted their growth strategies – up from 60% in 2024 – and the rest are planning to. 

Their top operational priority to achieve their growth objectives over the next three years remains advancing digitisation and connectivity – as it was in 2024. That’s essential to providing the foundations from which they can benefit from emerging tech and, in particular, agentic AI.

It’s not just chief executives’ growth strategies that need to be adaptable in the face of competing pressures. Over half of UK CEOs (54%) say their role has evolved significantly, with new expectations and greater complexity.

As organisations become more reliant on tech and AI, chief executives say they need to improve their digital and AI literacy. And CEOs are putting greater focus on transparent communications as they look to lead their people through uncertainty and change.

With different jurisdictions taking different approaches to regulations in key areas including AI and ESG, CEOs also recognise they need greater regulatory understanding.

And they haven’t lost sight of longer-term objectives. ‘Greater accountability for environmental and societal impact of organisations’ is joint top of the leadership capabilities they say are becoming most essential.

Despite economic uncertainty, UK CEOs are investing heavily in AI. 81% of business leaders say AI is a top investment priority for their organisation. The vast majority (87%) anticipate spending 10% or more of their budget on AI in the next 12 months.

And they’re expecting to see returns. Over four-fifths (82%) expect a return on their AI investment in three years or less. A fifth (21%) expect to see ROI in a year or less. That appears more optimistic than in 2024, when 83% of CEOs said they weren’t expecting to achieve a return for at least three years.

From what we’re hearing from clients, there’s an expectation that organisations will be AI-ready within a three-year timeframe. But chief executives expect the investments they’re making now to improve efficiency and productivity to pay off in a year or less.

Working with clients on their AI implementations, we’ve seen examples where real tangible value has been added – for example, where tasks that took nine weeks can now be done in as little as nine minutes. The big challenge is taking that from single instances in particular functions and scaling it across the enterprise.

The accelerated adoption of AI is creating new challenges for CEOs. They express reservations regarding ethical implications (61%), technical capability and skills to implement (45%), and cost (44%).

Over three-quarters (76%) of UK chief executives say the pace of progress on AI regulations will be a barrier to their organisation’s success. And over half (53%) say AI regulation should be increased – that’s some contrast to responses from the US, where just 34% of CEOs agree. That could reflect uncertainty over the direction of travel in the UK – will there be AI-specific regulations or will the Government rely on existing regulation?

Whatever the answer, there appears to be a consensus emerging among business leaders that robust governance frameworks will be critical for AI's sustained success.

Three-quarters (75%) of UK chief executives say AI workforce readiness, or upskilling of their workforce on AI, will impact their organisation’s prosperity over the next three years. And 62% are concerned about the impact of AI on company culture – it was just 32% in 2024. Consequently, they’ve stepped up their efforts to address immediate concerns about disruption caused by the introduction of AI. And they’ve all made changes to their longer-term (2- 5-year) workforce strategies in response to AI.

A key concern for employees about the adoption of AI is job security – will AI replace them? The vast majority of UK CEOs (88%) expect overall headcount to increase over the next three years – with just 5% expecting it to fall.

But AI will change how work is done and the skills required. As part of the changes they’re making to their long-term workforce strategy, 71% of our business leaders are redesigning roles and career paths to reflect AI collaboration. And 82% are rethinking the skills required for entry-level roles.

To help address concerns about the impact of AI on roles, 45% of UK CEOs say they’re communicating openly with employees. And 52% are engaging with external AI experts to help them adopt and embrace AI across their workforce.

CEOs have made a step change in their efforts to get the digital skills they’ll need in their workforce. Over three-fifths (83%) say the integration of AI has made them rethink how they train and develop employees – just 58% had taken that step in 2024.

Over the short term – the next 12 months – they’re providing AI education across the whole workforce (47%) as well as tailored, role-specific training (42%). And as part of their long-term workforce strategies, UK chief executives are looking at how they identify and develop AI skills internally – through reskilling and redeployment – and hiring them into the business. The race for talent is intensifying.

While attitudes toward ESG vary across regions, our 2025 survey indicates that sustainability remains high on the UK CEOs’ agenda. ‘Climate impacts’ comes in at number 3 in terms of the challenges they say are driving short-term decisions. And over half (56%) of UK chief executives say climate change, natural disasters and extreme weather events will impact their organisation’s prosperity over the next three years.

When we asked CEOs what leadership skills are becoming most essential, ‘greater accountability for environmental and societal impact of organisations’ landed in joint first place. It’s more evidence that ESG remains a top priority. It’s a fundamental business skill that people need to run their businesses.

And while business leaders are dealing with many complex and interrelated challenges, just 10% have decreased their sustainability initiatives to balance other business priorities. Few (19%) believe that sustainability as a concept is losing relevance for driving business success and progress.

Notable across our sustainability findings this year is an increase in confidence around net-zero goals. Two-thirds (67%) of UK CEOs now express confidence in meeting their net-zero targets by 2030 – that’s up from just over half (55%) in 2024. This could be due to businesses reviewing and reassessing their interim climate goals to be more realistic and aligned with core business strategy.

The story that has emerged this year is one of sustainability increasingly coming of age, embedding within functions and becoming business as usual. Three-quarters of UK CEOs (74%) say they’ve fully embedded sustainability into their business and believe it’s critical to their long-term success – that’s up from 67% in 2024. And almost half (49%) say they’re aligning sustainability goals with their core business strategy to demonstrate value to their stakeholders.

UK businesses are maturing in their use of ESG data – 38% of UK chief executives say they now use data and impact measurement to better communicate the outcomes of sustainability programmes. And 29% are quantifying the impact of sustainability risks and/or opportunities on their business to support the financial value of sustainability.

Two-thirds of UK CEOs are taking sustainability into account when making major decisions on capital spending. Although there remains work to do in lifting the depth of this assessment as only 27% comprehensively calculate and integrate both the costs and potential return on investment of sustainability initiatives into every major capital decision.

UK chief executives may be positive about hitting their net zero goals – but there are still significant challenges to overcome. Top of those is the complexity of decarbonising supply chains, followed by a lack of skills and then cost.

Lack of appropriate technology solutions to gather and analyse data has become less of an issue. The solutions are now more readily available and enabling organisations to become more sophisticated in their use of data. That may in turn explain why cost features higher in the list of barriers to net zero this year. Organisations are now in a position where they have data that’s enabling them to investigate the real cost and value of sustainability.

Much has been made of differences in approach to ESG in different parts of the world – and what that means for CEOs having to navigate polar attitudes. Over a quarter (27%) of UK business leaders say they’ve adopted a different approach to sustainability depending on region or market context. And almost two-thirds of UK CEOs (65%) say that while successfully addressing sustainability issues is important to the longevity of their business, the public debate detracts from their ability to stay focused on what matters.

But, overall, UK CEOs feel they’re on top of these issues, with 96% confident in their organisation's ability to navigate regulatory and political differences across markets when it comes to ESG and sustainability.