City dealmaking in the financial sector has been facing challenges due to uncertainty surrounding the upcoming Budget and the US election, according to investment bank Peel Hunt. The bank reported a slowdown in finance deals activity in recent weeks, impacting its income forecasts despite an increase in revenue during the first half of the year.
Peel Hunt stated, “Market activity has slowed again in recent weeks ahead of the upcoming Budget and US election.” The bank anticipates that performance for the full year will align with market expectations and remains optimistic about seizing opportunities for growth when market confidence resurfaces.
Revenue for Peel Hunt saw a rebound to £53.3 million for the six months up to September 30, up from £42.7 million in the corresponding period last year. This improvement was attributed to a more positive macroeconomic environment and successful completion of M&A financial advisory mandates.
With Labour’s forthcoming Budget expected to bring about tax increases, including a potential rise in capital gains tax, financial firms are preparing for challenges ahead. Chancellor Rachel Reeves has indicated the need for tough decisions during the spending review, which could impact the finance sector.
On a more positive note, Peel Hunt is anticipating a potential surge in the number of UK companies seeking to float in the latter part of the year. Following a low in 2023, the London Stock Exchange witnessed the addition of eight new companies in the first half of 2024, raising a total of £513.8 million. This included the notable listing of computing firm Raspberry Pi, which raised £178.9 million in June.
The financial industry is bracing itself for the implications of the Budget and the US election on dealmaking activities, with a watchful eye on potential tax changes and market confidence levels in the coming months.