In April 2026, the International Chamber of Commerce published a report that put some concrete numbers on an issue that business leaders had been feeling for years. Covering ten major economies representing around 70% of global GDP, The Cost of Uncertainty on Investment report found that surging economic policy uncertainty resulted in an estimated reduction of US$202 billion in global business investment in 2025. Economic policy uncertainty reached almost 3.5 times its historical average, exceeding the peaks recorded during both the 2008 global financial crisis and the COVID-19 pandemic. Venturing a look into the future, the outlook for 2026 is even starker: if volatility persists at the same intensity, losses could nearly double to US$380 billion.

ICC Lead Economist Mélanie Laloum played an important role in shaping the study and commissioning the report to Oxford Economics. With a macroeconomic background from the World Bank and the Inter-American Development Bank, her work at the ICC focuses primarily on issues relating to international trade, climate and taxation, where she researches how global policy shifts ripple through investment decisions.

The Cost of Uncertainty on Investment report started life as a question borne out of curiosity. During last year’s widespread talk of tariffs and businesses adopting a wait-and-see posture, Mélanie asked ICC chamber executives around the ICC global network a simple question: what is the main trade concern for businesses in your country? She offered a list of options: tariffs, changes to trade agreements, export/import restrictions among others. The response was one that she was not expecting. “Uncertainty was the most prevalent answer, surpassing tariffs as the main challenge to trade. That really surprised us.”

This discovery became the starting point for a far more ambitious exercise: putting a number on what uncertainty actually costs. Laloum commissioned Oxford Economics to conduct an analysis to answer three questions.

1.       How did uncertainty evolve in 2025? (and how did this compare to previous crises like COVID-19 or the global financial crisis?)

2.     How much has uncertainty weighed on business investment?

3.     How could investment react in 2026 if uncertainty worsens or eases?

The study settled on ten major economies: Brazil, Canada, China, the EU-4 (France, Germany, Italy and Spain), India, Japan, Mexico, South Korea, the United Kingdom and the United States. These countries were selected for data availability and to capture a broad range of perspectives across the global economy. Economic policy uncertainty was measured using the Economic Policy Uncertainty (EPU) Index, developed by Baker, Bloom and Davis in 2016. The index quantifies the frequency with which terms related to the economy, policy and uncertainty appear together in major news outlets.

The results from ten economies

What the data revealed was unprecedented in scale. In 2025, several countries in the sample saw uncertainty surpass historical levels entirely. “Canada and Mexico’s investment were hit hardest by uncertainty,” notes Mélanie. As a close trading partner to the United States, Canada experienced a turbulent 2025, marked by successive tariff announcements and repeated trade policy U-turns. As such, Canada experienced its largest EPU spike by far in history in the second quarter of 2025. Mexico has experienced higher levels of uncertainty in the past. “However, as an emerging economy, it remains structurally more vulnerable to external shocks, making investment particularly sensitive to increases in uncertainty”. South Korea’s increase in uncertainty, meanwhile, reflects a more specific cause: domestic political instability compounding external trade pressure.

China presents the most counterintuitive result, proving to be comparatively resilient to the 2025 uncertainty shock. The report traces this back to 2018, when the first Trump administration began targeting Chinese imports with tariffs. “Businesses in China have been operating in an environment of elevated uncertainty since 2018 and have gradually adapted their strategies accordingly. This is why the impact of shock in 2025 was limited compared to other countries,” she says.

Brazil and India showed a related but distinct form of resilience. “As large, comparatively protectionist economies with substantial domestic markets, both countries rely less on external demand, making them less exposed to shocks tied to trade volatility,” she adds.

The opposite can be said for South Korea, a highly trade-dependent economy, which experienced a substantial decline in business investment due in part to its exposure to US trade policy, notably in the automotive and steel sectors.

Looking more closely at the EU-4 economies (France, Germany, Italy and Spain) and Japan, investment losses remained relatively limited. As large, diversified advanced economies, both experienced investment declines of around 1% as a result of elevated uncertainty. Their lower sensitivity to uncertainty shocks reflects the depth and stability of their domestic capital markets, diversified sources of investment, and institutional frameworks that provide businesses with greater certainty over the medium term.

The United Kingdom was the least affected country in the entire sample, something that could be linked to Brexit. “The uncertainty shock associated with Brexit was both significantly larger and more persistent than the uncertainty shock experienced in 2025. Moreover, the UK appeared in 2025 to have a relatively less conflictual trade relationship with the USA than many European countries.”

The United States saw the largest loss in investment in dollar terms (US$74 billion), although it is thought that the success of the AI boom softened the blow of economic policy uncertainty. Business investment grew by 4.1% in 2025 but would have reached 5.9% in the absence of elevated uncertainty.

There’s no one-size-fits-all

The Netherlands does not appear in the ten-country sample, a result of data constraints rather than relevance. But the implications for a small, deeply trade-dependent economy are clear from the report’s broader pattern: openness to trade increases exposure to uncertainty shocks.

When asked what advice she would offer internationally trading Dutch businesses, Mélanie says that there is no simple formula. Instead she highlights two consistent strategies that emerged from ICC’s Chamber Pulse report which draws on survey responses from chamber executives across the global ICC network. “First, most businesses have not opted for relocating production, choosing instead to diversify their exports markets and suppliers. Second, businesses in 2025 also chose to absorb higher costs or pass them on to consumers to protect competitiveness and profitability.” The result is what she describes as a simultaneous pursuit of global and local strategies: diversifying clients and suppliers where possible, while recognising that excluding China entirely is unrealistic given its industrial capabilities and cost competitiveness.

Rational responses to uncertainty

Beyond the investment figures, we wanted to ask Mélanie about the psychological aspects of uncertainty. Her response identified three distinct channels through which uncertainty affects investment decisions. “First is the wait-and-see; businesses postpone investment as uncertainty increases the value of waiting for more information. Second is that when policy uncertainty rises, investors demand higher risk premia, which translated into higher financing costs. And third, the precautionary channel is when companies reduce spending and build up cash reserves as the outlook becomes less predictable.”

All three reactions are rational responses to unclear or inconsistent signals from policymakers. “When businesses lack clarity about the direction of economic policy – or when policy messages are mixed or poorly communicated – it becomes much harder for them to plan, invest and make long-term decisions. This is particularly true for SMEs,” she says. In Mexico, she recalls, many smaller businesses were simply cautious, “waiting to see how negotiations between the Trump and Mexican administrations would turn out”.

What about the future?

The report’s projections for 2026 are where the stakes are raised. To simulate an adverse scenario, Mélanie asked Oxford Economics to simulate what would happen if every economy in the sample experienced the same magnitude of uncertainty shock that hit Canada in 2025. The result: the cost of uncertainty could roughly double, from the US$202 billion estimated for 2025 to approximately US$380 billion in 2026.

It is important to note that the report was commissioned at the outset of the conflict with Iran, when there was still considerable uncertainty about how the situation would unfold and what its economic implications might be. “Right now, this feels really tangible,” says Mélanie. “We’ve spent the past six months really in uncertainty. As an economist, I’ve never seen projections getting revised every week.”

Her conclusion is unambiguous. Uncertainty is not background noise that businesses can simply ignore. “Businesses need clarity about the way forward,” she says. “Uncertainty has a cost and it is considerable – it is not something that can be ignored.” She now opens many of her presentations with a quote from Nicolai Tangen, CEO of Norway's sovereign wealth fund: “Stability has never been so unstable.” Few observations capture the past year more succinctly.

Do you want to read the whole report? Download it here.

https://iccwbo.org/news-publications/report/the-cost-of-policy-uncertainty-on-investment/

The cost of uncertainty on investment: key figures

• In 2025, economic policy uncertainty reached almost 3.5 times its historical average — exceeding peaks seen during the global financial crisis and COVID-19

• Global business investment fell by 1.4% as a result, equivalent to US$202 billion in lost or delayed capital spending

• Without the uncertainty shock, global investment would have grown at more than four times that rate

• Global investment growth in 2025 slowed to just 0.4% — less than a quarter of its potential pace

• Canada and Mexico were hardest hit, with investment estimated 6.8% and 5.3% lower respectively than it would otherwise have been

• The United States recorded the largest nominal loss: US$74 billion, despite strong AI-driven investment

• The EU-4 and Japan limited losses to around 1%, reflecting more diversified economic structures

• The UK was least affected of all ten economies studied

2026 outlook

• Under an adverse scenario, global investment losses could nearly double to US$380 billion (equivalent to 100% of all FDI inflows to North America in 2025)

• Under a favourable scenario, greater policy clarity could generate an additional US$252 billion in investment

• The gap between the two outcomes: more than US$630 billion