Merger and acquisition (M&A) activity in London before the general election hit its lowest level since the pandemic.
According to Office for National Statistics data, deals fell by 35% throughout June to 93 ahead of Labour’s victory in early July.
This marked a 45% drop year on year and was the lowest during any month since May 2020, when the UK was grappling with its first Covid 19 lockdown.
Activity slipped by 17% across the second quarter against the first as 385 deals were made.
Houlihan Lokey's Consumer Group managing director Sam Fuller noted high interest rates and resultant uncertainty had hampered businesses over the quarter.
Though a Bank of England rate cut since has boosted hopes for a rebound, Fuller added October’s Autumn Budget was now likely in full focus.
“[It] is feeling increasingly seismic and will almost certainly impact M&A activity levels,” he told the Telegraph.
“Changes in corporate and capital gains tax rates, in particular, could impact company valuations and seller incentives, meanwhile an increased tax burden will further hurt an already struggling consumer economy.”
Many firms had also turned to smaller inward-looking strategies rather than pursuing acquisitions on the back of high borrowing rates, Fuller pointed out.
The value of foreign companies acquiring UK companies was £5.0 billion, the ONS said, down from £5.6 billion in the first quarter, while outward M&A fell to £4.2 billion in the second quarter from £4.6 billion in the first.
Domestic M&A totalled £2.6 billion, down £1 billion from the first quarter.