After a challenging couple of years for dealmaking in consumer markets, challenges persisted in 2024 with 14% fewer deals completing in the consumer sector compared to the same period in 2023 (Pitchbook: January to October 2024, Consumer excluding ‘Automotive’, including all buyer categories). With the previous two years of consistent inflation and interest rate rises still firmly in consumers’ minds, 2024 was bound to be impacted by cautious consumer spending and, correspondingly, deal activity in the industry, even with the return of the cost of living to more normal levels.

Our Consumer outlook update in mid-2024 showed consumer sentiment towards the economy was improving, and cautious optimism for future spending came through as a clear message. However, in the latter part of the year, anticipation around the autumn budget and related cost-of-living pressures led to a drop in the GfK Consumer Confidence Index to -21 (October 2024), its lowest level since March 2023.

Although greater stability may be expected in 2025 with the UK and US elections out of the way, consumers are likely to continue spending cautiously as the impacts of the budget’s increased National Minimum Wage (NMW) and National Insurance costs on businesses play out in the wider economy. Deal activity is likely to focus on consumer businesses with a robust and unique proposition and a track record of growth, despite the economic challenges of the past few years.