The analysis found that during a decade of major macroeconomic and geopolitical changes, most UK equity returns were generated during a brief period linked to a major global or economic event. On average, nearly 60% of the FTSE 100’s returns were generated on just 59 days each year – about 16% of the year – which coincided with major global or economic events.
It also found that between 2017 and 2024, the 3,500 largest listed businesses globally lost $320bn in profit during periods associated with geopolitical and macro uncertainty.
Mats Persson, EY-Parthenon UK Macro and Geostrategy Leader, commented: “After years of cheap money and relative geopolitical stability, a wave of macro shifts – from trade tensions to global conflicts – now means that government policy and global events are having a greater impact on value and profits than in many decades. However, many businesses still have growth strategies and governance structures designed for when capital was cheap, supply chains were long and geopolitics steady.
“This new environment is creating winners and losers. A cohort of businesses in our study in geopolitically exposed sectors and regions managed to either protect or achieve top margins during periods of significant macro uncertainty. These businesses have successfully diversified their portfolio, managed their cost base, identified and understood various policy changes and updated their governance to reflect a different world. It is essential for CEOs and boards to learn from these companies to ensure long-term sustainability.”
Market shifts are creating ‘winners and losers’
EY-Parthenon’s newly launched Macro and Geostrategy practice, which is advising clients on how to navigate global volatility, has monitored nearly 3,500 firms with revenue of above $1bn globally and analysed how their EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) profit margin has been impacted by macro and geopolitical shifts. It found that:
- Just 1 in 10 global firms (415) managed to sustain and protect a top-quartile EBITDA margin during 2017-2024
- In this period, 1 in 4 firms experienced a 5% or more EBITDA margin loss, translating into $320 billion in lost profit across all firms analysed
- The rate at which top-performing firms fell to under-performing and distressed within 24 months nearly doubled to 11.1% in 2022-24 compared to 2014-16
- However, 5% of firms (179) moved from under-performing or distressed to top performing, during 2014-24
- Of 833 firms analysed in China, 40% (335) have experienced EBITDA erosion of almost $73bn, largely concentrated in the real estate, steel and construction sectors
- Of the 100 UK firms analysed, 14 experienced significant margin erosion, with $2.5bn in profits lost during a period of macro volatility.
The research found that businesses with very similar exposures, particularly those in the automotive, industrials, construction and energy sectors, can perform very differently during periods of macro and geopolitical shifts.
Mats Persson said: “No company can fully control the macro environment, but firms which have performed well and managed to protect and grow their EBITDA margins during times of macro change share a few clear traits. They actively build macroeconomic and geopolitical analysis into their strategy decisions, diversify their portfolios to avoid over-reliance on any single policy or region, and use practical, actionable scenario planning linked to clear triggers and KPIs.
“Equally important is that they align macro insights with micro-level business decisions – from trade flows and financing choices to cost structures and operating models – and support this with strong governance and open engagement with stakeholders across their value chains. Taken together, these actions can help companies stay resilient, adapt quickly, and emerge stronger when big external shocks hit.”