Deal-making at 14-year low as interest rate pain hits home

DEAL-MAKING in Britain has slumped by a third so far this year, hitting its lowest level since the global financial crisis, new figures show.

Mergers and acquisitions (M&A) with any UK involvement totalled $265.4bn (£207bn) so far this year, 33pc less than in the same period in 2022 and the lowest total since 2009, according to the London Stock Exchange Group (LSEG).

High interest rates and global geopolitical turbulence have led to a worldwide deal drought, but UK M&A has plunged much faster than in Europe or the US. The value of global deal-making fell by 17pc in 2023 to a decade low. M&A of UK companies, however, fell nearly three times as fast, dropping by 45pc year on year. The biggest deal was Swedish buyout group EQT’S $6.1bn takeover offer for veterinary drugmaker Dechra Pharmaceuticals.

In the US, by contrast, the value of M&A at American companies fell by only 6pc. In France and Germany, deals fell by 29pc and 36pc respectively.

UK M&A fell so steeply because the number of inbound deals involving overseas companies dropped by nearly half (49pc), driven by a slump in acquisitions from the US. Lucille Jones, senior manager at LSEG Deals Intelligence, warned: “Steeply rising interest rates and a concerning outlook for the UK economy, combined with stricter antitrust enforcement and ongoing geopolitical tensions, curbed the appetite for deal-making in 2023.”

Official data show gross domestic product shrank by 0.1pc between July and September. This makes the UK’S post-covid recovery one of the worst in the G7, second only to Germany.

In 2023, 5,500 M&A deals were announced in the UK, a fifth fewer than 2022. Global M&A activity totalled $2.9trillion in the year to date, making 2023 the most sluggish year for deal-making since 2013.