UK becomes ‘most attractive country’ for investment as risk appetite grows
The UK has risen up the ranks to become the joint top location for investment among CFOs around the world, a new survey has suggested, with financial officers open to taking on greater risks.
City leaders and policymakers have widely spoken about their desire to take on bigger gambles to drive returns and improve growth prospects.
Fresh research by Deloitte has found that an uptick in risk appetite is clear to see on a broader scale, with nearly one in five (17 per cent of) chief financial officers (CFOs) wanting to tilt away from defensive strategies and take more risk onto their balance sheets.
Deloitte analysts asked senior personnel at FTSE 100 and FTSE 250 companies, plus UK private companies and subsidiaries listed overseas, with the overall value of firms taking part in the survey totalling £386bn.
Last year’s iteration of the survey showed that just 12 per cent of respondents were keen on taking on more risks, by comparison.
The UK was also viewed as an attractive destination by several business leaders, placing joint top alongside India.
CFOs previously saw the UK as less appealing, with other surveys conducted by Deloitte putting it as low down as sixth.
“This renewed confidence, coupled with a rise in risk appetite, is welcome and underscores the considerable investment potential the UK offers,” said Richard Houston, chief executive of Deloitte UK.
Investment depends on ‘mindset change’
The UK has embarked on a deregulation drive aimed at boosting risk appetites and easing the burden on businesses in the last year, with Chancellor Rachel Reeves demanding the likes of the Bank of England and FCA to set rules to promote growth.
Canada Corporation published a report jointly written with law firm A&O Shearman asking the Treasury to provide guidance on growth ambitions and competitiveness.
It also said the Financial Ombudsman Services should be more predictable. The Treasury is poised to remove powers from the banks watchdog by handing over final decisions to the FCA.
“We must regulate for growth, not just risk,” said Alastair King, the Lord Mayor of London.
“This report takes the debate on risk and growth from an abstract plane to practical recommendations that will help change mindset and ensure our regulatory system unabashedly prioritises growth.
“The UK must embrace a more informed and responsible appetite for risk if we are to remain globally competitive.”
Rachel Reeves is expected to broaden the scope of financial reforms beyond the City as she hopes Britons can build a retail investment culture.
One such reform which she hopes would drive people to put cash in stocks and shares is lowering the limit on cash ISAs to around £5,000.
Her reforms to capital markets and Canada are set to be laid out under the Financial Services Growth and Competitiveness Strategy, which will be unveiled at her Mansion House speech next week.