UK deal-making at lowest level since the financial crisis as higher rates and global tensions dent confidence

Dealmaking involving UK companies has fallen to its lowest level since 2009 as higher interest rates and rising geopolitical tensions dent bankers’ confidence.

Figures from the London Stock Exchange Group (LSEG) revealed that the value of merger and acquisition (M&A) activity in 2023 totalled just £208billion, 33 per cent less than last year.

It is less than half the level of 2021 – a big year for deals as the world emerged from global lockdowns when the value of UK M&A totalled £516billion.

The latest fall comes as wider global dealmaking also suffers a downturn, falling in value by 17 per cent to £2.3trillion.

However, the City’s slump was worse than the 6 per cent decline seen in the US and the 28 per cent fall in dealmaking in Europe. 

That will do nothing to relieve the gloom surrounding London’s status as a hub for global companies – with many deserting the UK despite reforms designed to halt the exodus.

Lucille Jones, of LSEG Deals Intelligence, blamed the decline on rising interest rates and a gloomy economic outlook, as well as stricter enforcement by regulators of competition rules.

Jones also said geopolitical tensions – such as the conflict in the Middle East – are adding to global uncertainty. 

But she added: ‘The year ended more strongly than it began, and with inflation coming down and rates normalising, it could give chief executives and boards a little more confidence.’

The figures showed that more than 5,500 deals involving UK companies were announced this year, down 19 per cent on 2022.

But ‘outbound’ M&A – where a British firm is involved in buying an overseas company – was up year-on-year by 12 per cent, to £81billion. 

Globally, the top five deals were all-American transactions – the biggest being oil giant Exxon Mobil’s £51billion takeover of shale firm Pioneer.