Dealmaking slumps in UK amid higher taxes and trade uncertainty

The number of takeover deals involving UK companies plunged at the end of last year, according to official data, as companies battled with uncertainty over US trade policy and higher taxes.

In December 2024, mergers and acquisitions (M&A) across the UK fell to just 65, a sharp drop from 151 in November and just over half the number at the end of the previous year.

The fall in activity came during the period in which the Government announced higher taxes for companies, while Donald Trump won the US election with a promise of widespread global trade tariffs.

The Bank of England said in a report at the time that uncertainty came from “high borrowing costs, higher capital expenditure costs, squeezed margins and access to finance” for companies.

It meant the quarterly M&A figure also dropped to 402, according to the Office for National Statistics (ONS), down 13% on the previous three months and 9% on the same period in 2023.

However, despite the fall in volume, the value of domestic M&A during the period rose by more than a quarter to £8.6 billion.

This was boosted by two major deals: Nationwide buying Virgin Money for £2.9 billion and housebuilder Barratt buying Redrow for £2.5 billion.

The value of deals by foreign firms buying UK companies more than halved to £4.5 billion, the ONS added.

Sam Fuller, a managing director at investment bank Houlihan Lokey, said the figures “underscore the complexity of the current dealmaking landscape”.

“The macroeconomic backdrop facing UK businesses remains challenging with high levels of uncertainty and a nervous consumer outlook impacting sentiment.”

He added: “The global geopolitical picture adds another layer of complexity for the M&A market with uncertainty around US trade policy, the spectre of tariffs, and ongoing tensions in Ukraine weighing on investor confidence.”