UK suffers only deal-making slump in Europe as Labour hammers confidence

Core Insights - The UK experienced a decline in mergers and acquisitions (M&A) activity, with a drop of 8% to $217.2 billion (£162.3 billion) in 2025, contrasting with growth in other European countries [1][7] - Uncertainty surrounding the UK Budget and potential tax increases has led companies to delay takeover plans, impacting overall business confidence [4][5][6] - Despite the downturn, there remains a "pretty healthy" pipeline of 248 active deals in the UK that have yet to be announced [8] M&A Activity Overview - The value of M&A activity in the UK fell from $237.3 billion in 2024 to $217.2 billion in 2025, marking an 8% decline [1] - In contrast, France and Italy saw increases in dealmaking volumes, with rises of 18% and 23% respectively [2] - The largest deal in the UK for the year was Merck's acquisition of Verona Pharma for $10 billion [7] Investor Confidence - The uncertainty around the Budget not only affected M&A but also led to significant withdrawals from UK stock markets, with over £10 billion pulled out in six months [7] - October recorded a net outflow of £3.6 billion from UK stocks, making it a record month for withdrawals [7] Future Outlook - Activity in the M&A sector is expected to improve following the Chancellor's avoidance of significant tax rises in the Budget [9] - The clarity provided by the Budget is anticipated to facilitate transactions moving forward [9]