Differences in UK Firms’ Willingness to Tolerate Investment Risk

In September 2026, the UK Prime Minister Andy Burnham told major corporate leaders that the UK needs a change in business culture and that local leaders should be empowered to work closely with companies that take commercial risks.

As one of the primary causes of the UKs underinvestment problem is an unwillingness to tolerate risk, despite the fact that it has one of the most developed capital markets in the world, it is important to understand how willing, or unwilling, the owners of UK firms are to tolerate risks when making their investment decisions. This is particularly important for innovation investments which can yield huge economic benefits for businesses and wider society, but have an inherent risk attached to them.

Without an economy where firms are willing to tolerate risks when investing, firms will defer to safe and short-term investments that fail to deliver the levels of investment that would drive productivity growth to levels that raise our competitiveness whilst also raising the incomes of businesses and the wider population.

This report directly addresses this important issue by providing detailed evidence over three time periods on the willingness of UK firms to tolerate risks when investing. Our evidence reveals a nuanced picture of willingness to tolerate investment risks that shifts over time and is also disproportionately concentrated within a particular size class of firms, and within specific industry sectors and regions.

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