FTSE 100 Sees Modest Gains Amidst Corporate Shifts
London, UK – July 9, 2025 –
The UK economy continues to face a period of subdued growth and heightened global uncertainty, as outlined in the Bank of England’s latest Financial Stability Report released today. While the FTSE 100 saw modest gains, major corporate developments, including a significant acquisition by Merck and transformative strategies from BP, WPP, Jet2, and housing developers, are shaping the market landscape.
Bank of England Warns of Weaker Growth Amid Uncertainty
The Bank of England’s Financial Policy Committee (FPC) today issued a cautious outlook for the UK economy, projecting slightly weaker and more uncertain growth for 2025 than previously forecast in November 2024. The report cited rising geopolitical and trade tensions as key contributors to this uncertainty. While acknowledging a “broadly resilient” UK corporate sector and a strong banking system, the FPC warned that risky asset values remain vulnerable to sharp corrections, which could impact the cost and availability of finance for households and businesses. The Bank’s Monetary Policy Committee (MPC) maintained the base interest rate at 4.25% in its most recent decision on June 19th, with expectations for potential further cuts later in the year, possibly in August. Inflation, as measured by the Consumer Price Index (CPI), stood at 3.4% in May, slightly down from 3.5% in April, remaining above the Bank’s target.
FTSE 100 Climbs Marginally as Markets React to News
Despite the Bank of England’s cautious tone, the FTSE 100 experienced modest gains throughout the day, closing at approximately 8867.02, up about 0.15% from its opening. The slight upward movement suggests a mixed reaction from investors, balancing economic concerns with specific company news and broader market sentiment.
Merck’s Verona Pharma Acquisition Boosts Biopharma
A significant market event today was the announcement of Merck’s (NYSE: MRK) definitive agreement to acquire UK-based Verona Pharma plc (Nasdaq: VRNA) for an estimated $10 billion. This acquisition will add Ohtuvayre® (ensifentrine), a promising new drug for chronic obstructive pulmonary disease (COPD), to Merck’s portfolio. The deal, which has been unanimously approved by both companies’ boards, is expected to close in Q4 2025 and is poised to significantly strengthen Merck’s cardio-pulmonary pipeline. Verona Pharma’s American Depository Receipts (ADRs) surged on the news, reflecting strong investor confidence in the deal’s potential.
Corporate Transformations Underway
Several major UK companies are navigating significant strategic shifts:
- BP (BP.L) Pivots Back to Hydrocarbons: In a notable strategic adjustment, BP has announced plans to reopen its Tripoli office in late 2025 and has signed a Memorandum of Understanding (MOU) with Libya’s National Oil Corp. (NOC) to explore new opportunities. This move, which includes assessing the rehabilitation of the Sarir and Messla oil fields, signals a renewed focus on hydrocarbon assets to bolster financial performance and meet investor expectations, following a previous pivot towards lower-carbon energy.
- WPP (WPP.L) Faces Headwinds and Leadership Transition: The advertising giant WPP has downgraded its full-year guidance for 2025, now forecasting a decline of 3% to 5% in like-for-like revenue less pass-through costs. This comes as the company faces worsening macroeconomic conditions, the loss of key client accounts such as Mars, and a leadership transition with CEO Mark Read’s upcoming retirement. WPP is also undergoing a major overhaul of its network, including a renewed focus on artificial intelligence and the rebranding of its media investment unit to WPP Media. WPP shares saw a significant drop in pre-market trading following the revised outlook.
- Jet2 (JET2.L) Focuses on Customer Acquisition and Digital Enhancement: Leisure travel group Jet2 reported a strong financial year ending March 2025, with a pre-tax profit of £578 million, up 11% year-on-year. Looking ahead, Jet2 CEO Steve Heapy outlined a strategy to cut customer acquisition costs by leveraging big data, cloud architecture, and AI to provide better intelligence on customer behavior. The company is upgrading its digital marketing infrastructure to a cloud-based platform to deliver more personalized marketing and improve conversion rates, alongside a continued focus on customer retention. Jet2 also celebrated the successful operational launch of two new bases, Bournemouth and London Luton, extending its reach across the UK.
- Housing Developers Face CMA Probe and Affordable Housing Commitments: The UK housing sector saw developments today as seven major housebuilders – Barratt Redrow (following the merger of Barratt and Redrow), Bellway, Berkeley Group, Bloor Homes, Persimmon, Taylor Wimpey, and Vistry – agreed to pay a combined £100 million towards affordable housing programs across the UK. This commitment comes after a Competition and Markets Authority (CMA) investigation into concerns about information sharing regarding sales, pricing, and incentives. The CMA is now consulting on these proposed commitments, which also include working with industry bodies to develop guidance on information sharing. This initiative aims to address market concerns and increase the provision of affordable homes.
Today’s economic snapshot reveals a UK economy grappling with global uncertainties and inflationary pressures, with the Bank of England maintaining a cautious stance. Meanwhile, key players in the corporate landscape are actively pursuing transformative strategies to adapt to evolving market conditions and competitive pressures.
