UK fintech holds European crown but UAE threat looms
UK fintech maintained a heavy level of activity in the first half of 2025 but faced new threats from growing financial hubs.
Over 70 significant acquisitions of smaller rivals or complementary businesses were reported in the UK and Europe over the half.
This represented a 50 per cent bump on acquisitions compared to the previous 12 months.
The number of strategic partnerships also doubled from the prior period with over 50.
Hyder Jumabhoy, partner at White & Case, said: “Although the UK has retained its European crown in attracting growth capital, we continue to see reduced funding round deal volume.
“But what has been lost in fundraising appetite has been more than compensated for in consolidation activity. Those fintechs which embrace the drive for profitability will pull through to exit.”
Jumabhoy said the UK was staring down threats from the likes of the UAE which was “likely to continue to grow as a hub of private capital fundraising activity.”
UK fintech investment slumps
Fintech investment in the UK has felt the brunt of dampening investor appetite in the last year.
The country’s total investment reached $7.2bn in the first half of 2025, a five per cent decline from the same period in 2024 as M&A levels slumped.
It comes despite a push from Chancellor Rachel Reeves to push activity across the sector.
Reeves touted the growth of the sector in the Treasury’s Financial Services Growth and Competitiveness Strategy.
But efforts this far have appeared to fall flat with an absence of fintech listings and waning activity.
Klarna this week kicked off its second hit at an IPO with its debut on the New York Stock Exchange – a move many are viewing as a taster for fintechs on the US market.
Earlier this year, fintech bosses lobbied Reeves for tax incentives in a bid to boost listings.
The Chancellor was urged to ease burdens through allowing investors in newly listed companies to benefit from stamp duty holidays or capital gains tax cuts, according to Sky News.