The United Kingdom experienced a decline in mergers and acquisitions (M&A) activity in 2025, with analysts citing uncertainty surrounding the government’s budget approach as a contributing factor. The value of UK M&A fell by 8 percent to $217.2 billion, according to verified data from Mergermarket.
This trend set the UK apart from other major European economies, where dealmaking volumes increased during the same period. Market observers linked the subdued outlook to business concerns regarding potential tax policy changes and ongoing economic unpredictability.
Decline in UK Dealmaking
Recent data reveals that the value of mergers and acquisitions involving UK companies fell from $237.3 billion in 2024 to $217.2 billion in 2025. The eight percent decline marks the UK as the only European nation among the top 20 to record a drop in M&A value during the year.
This shift follows a period of strong deal activity, with many publicly listed UK companies acquired or taken private in previous years. Initial expectations for sustained momentum in 2025 faded as economic and political uncertainty soared.
Comparison with European Markets
While the UK faced a reduction in dealmaking, other leading European countries saw notable increases. Figures show M&A volumes rose by 18 percent in France and 23 percent in Italy during 2025.
The contrast highlights diverging investor sentiment and differing levels of economic confidence across European markets. Industry experts noted that these countries benefitted from greater clarity regarding fiscal and regulatory policies, supporting merger negotiations and investment activity.
Impact of Budget Uncertainty
Market participants attributed much of the slowdown in the UK to uncertainty over tax policy and the government’s budget. The period prior to the Chancellor’s Autumn Statement was marked by speculation over possible tax rises, contributing to delays in corporate decision making.
Lucinda Guthrie, the head of Mergermarket, stated, “In the UK, we had a lot of uncertainty around the Budget. There were eight weeks where you had a lot of news in the market, and people didn’t really know where they were. Uncertainty is just the worst thing for mergers and acquisitions.”
Investor Reactions and Market Outflows
Concerns about potential tax changes and policy instability also influenced investor behaviour. According to data from Calastone, UK investors withdrew more than £10 billion from global stock markets during the six months leading up to December 2025.
October witnessed a record month, with net outflows of £3.6 billion from UK stocks. November also saw significant withdrawals, with £3 billion exiting the market as uncertainty persisted.
Significant Transactions in 2025
Despite the overall decline, notable transactions occurred within the UK market. The largest deal involved the acquisition of pharmaceutical company Verona Pharma by US firm Merck for $10 billion.
Additionally, Athora completed a £5.7 billion takeover of Pension Insurance Corporation, a major insurer with European links. These transactions reflect continued interest in high-value sectors, even as overall deal activity remained subdued.
Final Summary
The UK’s decline in mergers and acquisitions activity in 2025 stands out against a backdrop of growth across major European economies. Persistent budget uncertainty and concerns about tax policy dampened business and investor confidence throughout the year.
Although significant deals were completed, the overall value of transactions fell, with substantial capital outflows from domestic investors. As the market awaits further clarity on fiscal direction, analysts will continue to monitor dealmaking trends
For further developments in UK economic policy and deal activity, users may utilise resources such as the Pie app.
