Government credibility crisis sees UK dealmaker confidence fall to decade-low

A poll of dealmakers suggests that confidence in the UK M&A market is at an all-time low. The survey by CIL found that only one-in-ten market stakeholders now had a positive view of the outlook for the next two years.

Volatility – linked to growing the trade policies of the world’s largest economy, and mounting geopolitical tensions in Europe – has hampered dealmaking activity across many markets in 2025. In the first six months of the year, for example, total IPO proceeds in Europe reached €4.0 billion driven by 16 IPOs in Q1 raising €3.1 billion – a considerable fall from the same period in 2024, which saw €11.5 billion raised.

In the UK, the mergers and acquisitions (M&A) market for the first half of 2025 recorded a total deal value of £57.3 billion. According to PwC’s latest Global M&A Industry Trends report, this represents a 12.3% decline compared to £65.3 billion in the same period last year. Deal volume also softened, with the UK seeing 1,478 transactions, down 19.1% from 1,828 in the year before, reflecting a more selective market environment.

And while some experts maintain that there may yet be a silver-lining to the gloomy picture, a new study from CIL suggests most dealmakers in Britain do not believe the same. Polling more than 100 UK market stakeholders – including private equity investors, management teams, corporate finance providers and business advisors – the researchers painted a damning picture of a market suffering a historic crisis in confidence.

CIL has run its Investment 360 Index survey for nine years now – but at no time over the best part of a decade have opinions in the UK deals market been lower. According to the firm’s findings, a dramatic turnaround only 13% of dealmakers now have a positive view of the short-term economic outlook for the coming 18-24 months, in stark contrast to in 2024, when 48% were positive.

Top of the drops

While a seemingly decisive election result suggested there would be a stable macroeconomic environment for the coming five years, what has since transpired has seen a surge in negative opinion around UK prospects. Only 16% were negative on the short-term picture last year, but this has boomed to 57% in 2025, thanks in part to dissatisfaction with the government’s policies.

While some of the situation has not been helped by global trends, the current administration has struggled to cope with the US’ newly ramped-up tariff regime. Often seen to concede major points, without achieving the noticeable delays or reductions other governments have managed, Prime Minister Keir Starmer and his cabinet have been found wanting by 72% of respondents, who said they did not feel the government was doing a good job. That is also the lowest rate since the survey began – including the years in which multiple governments collapsed over the implementation of Brexit, economic own-goals, and lapses in basic public health measures amid the pandemic.

There was some positive sentiment included in the survey. Long-term optimism remains positive – albeit still at a record low of 40% positive, 24% negative. Whether that is a silver-lining for the incumbent government remains to be seen – as the long-term picture may include a change of government, should current polling hold firm.

At the same time, perception of deal activity has gradually recovered from a record low sentiment in 2023, although respondents are less sure about future activity. The outlook for the next 12 months is more tentative than in 2024, with 53% of respondents expecting an increase in M&A activity and 40% anticipating stable levels, compared to 76% and 18% respectively in previous year – even as perceived asset quality remains stable, with 23% of respondents describing the current quality of good and 68% saying are average, compared to 23% and 60% respectively in 2024.

Speaking on the findings, Alex Marshall, senior partner at CIL, said, “This year’s findings reveal a marked deterioration in confidence: pessimism about the long-term economic outlook has reached record levels, dissatisfaction with government policy is at an all-time high, and deal activity remains sluggish. While some positives remain – pent-up demand, stable credit markets, and the steadying effect of lower inflation – the prevailing view is one of disappointment. Stability, once again, has failed to materialise.”