KPMG has released a series of reports highlighting the UK’s economic resilience amid global challenges. These analyses cover private equity trends, fintech funding, and the critical role of AI skills development, painting a picture of a market poised for recovery despite recent dips.
Private equity activity in the UK experienced a notable slowdown in 2025, with transaction numbers dropping by 10% to 1,751 deals.
However, the total value rose modestly by 3.5% to £176.6 billion, signaling a shift toward larger, more selective investments.
The first half of the year saw higher volumes, while the latter half focused on bigger deals, reaching levels not seen since early 2021.
Bolt-on acquisitions dominated at 59% of transactions, though buyouts surged to 298, their highest since 2021.
Sector-wise, business services led with 45% of deals, fueled by demand in professional and digital consulting, despite an 11% volume decline.
Technology, media, and telecoms fell 24%, healthcare dropped 28%, but industrials grew 49% and consumer goods edged up 3%.
Geopolitical issues, tariff concerns, and economic headwinds eroded confidence, leading to stricter deal criteria.
Yet, experts anticipate a 2026 rebound, driven by untapped capital, more available businesses, and emphasis on operational efficiency. Interest in defense sectors is also rising for stable growth.
As one KPMG leader noted, while 2025 was tough, early 2026 shows recovery signs as investors deploy funds strategically.
Shifting to fintech, the UK solidified its position as Europe’s top destination for investment in 2025, securing $10.96 billion—a 21% decrease from 2024’s $13.35 billion, the lowest since 2020.
This still outpaced combined funding in France, Germany, Belgium, the Nordics, Ireland, China, and Brazil, accounting for over a third of EMEA’s $29.2 billion total, which rose slightly from the prior year.
Globally, fintech funding climbed to $116 billion across 4,719 deals, boosted by venture capital ($56.7 billion) and mergers ($55.4 billion). Key UK highlights included Revolut’s $3 billion raise, the region’s largest.
Challenges like geopolitical tensions and high interest rates tempered activity, but improving regulations are fostering momentum.
Corporate venture capital globally hit $29.7 billion, with digital assets at $19.1 billion.
Looking ahead, the sector is entering a phase of targeted expansion, profitability focus, and better liquidity, though macroeconomic risks linger.
Complementing these trends, KPMG emphasizes enhancing AI skills and supporting innovators to spark investment growth.
With 73% of UK residents lacking AI training, closing this gap is vital for maintaining venture capital appeal.
The UK led Europe in 2025 with over £16 billion across 1,900 deals, setting the stage for a potential 2026 surge.
Initiatives include AI training programs, like those proposed by London’s mayor, and collaborations among businesses, governments, educators, and investors.
Universities are pivotal for talent nurturing, research, and commercializing AI. Widespread adoption could ignite start-up ecosystems, addressing talent shortages and driving industry-level shifts.
Overall, these KPMG updates underscore the UK‘s strengths in fintech and private equity, tempered by uncertainties, while advocating proactive AI upskilling for future prosperity. With stabilizing conditions, 2026 could mark a turning point for sustained innovation and investment.