UK shares are poised for a subdued start to trading on Wednesday, with the FTSE 100 expected to open flat after a June survey revealed that British companies' growth expectations have slipped to their lowest point this year. The downbeat mood comes even as consumer health giant Haleon reportedly explores a potential acquisition of US supplements maker Thorne, highlighting a divergence between cautious economic sentiment and ongoing corporate deal activity.
Survey Signals Cooling Business Confidence
The survey, conducted in June, captures the views of UK firms across sectors and points to a notable softening in optimism about the next quarter. Companies cited weaker demand and heightened uncertainty as key factors behind the downgraded outlook. This marks the weakest reading for growth expectations so far in 2025, suggesting that the post-pandemic recovery is losing some steam.
For investors, a decline in business confidence is often a leading indicator. When companies become more cautious, they may delay investment, slow hiring, or trim production. That can feed into slower economic growth and, eventually, lower corporate earnings. Markets tend to react quickly to such signals, repricing stocks based on expectations of future profits rather than waiting for actual results to emerge.
The flat open expected for the FTSE 100 reflects this cautious stance. A flat open means the index is likely to start the day little changed from the previous close, but that surface calm can mask underlying shifts in investor sentiment. Sectors tied closely to domestic UK demand, such as retail, hospitality, and construction, could face particular scrutiny as traders assess how the softening outlook might hit earnings.
Haleon's Potential Bid Adds Deal-Making Interest
Amid the broader caution, Haleon, the consumer health company spun off from GSK in 2022, is reportedly weighing a bid for Thorne, a US-based maker of dietary supplements and wellness products. The deal, if it materializes, would mark a significant move for Haleon as it seeks to expand its presence in the fast-growing supplements market.
Thorne is known for its high-end vitamins and personalized health products, a segment that has attracted interest from larger players as consumers increasingly focus on preventive health. For Haleon, which owns brands like Advil, Sensodyne, and Panadol, adding Thorne would diversify its portfolio beyond over-the-counter medicines and into the supplements space, where margins can be attractive and growth rates are often higher.
However, the reported bid is still at an exploratory stage, and no formal offer has been confirmed. Investors will be watching for any updates, as a successful deal could boost Haleon's growth trajectory but also raise questions about integration risks and valuation. The news comes at a time when M&A activity in the consumer health sector has been picking up, with companies looking to scale up and capture market share.
What It Means for Investors
For everyday investors, the combination of a cautious survey and a potential deal creates a mixed picture. The flat open suggests that the market is taking a wait-and-see approach, digesting the implications of weaker business confidence while also weighing the potential for corporate action.
Investors should note that a decline in growth expectations does not necessarily mean a recession is imminent. It does, however, signal that the economic environment is becoming less supportive for stocks, particularly those with high exposure to UK consumer spending. Sectors like financials, industrials, and consumer discretionary could see more volatility as analysts adjust their forecasts.
On the other hand, deal-making activity like Haleon's reported interest in Thorne can provide a floor for certain stocks, as acquisition premiums often lift share prices. For Haleon shareholders, the potential bid could be seen as a positive strategic move, but it also carries execution risk. Investors should monitor how the company finances any deal and whether it dilutes existing shareholders.
Broader market context also matters. The FTSE 100 has been supported this year by strong performances in energy and mining stocks, but a slowdown in UK growth could weigh on the index's domestically-focused components. Meanwhile, global factors such as interest rate decisions by the Bank of England and inflation data continue to influence sentiment. A recent survey showing UK firms turning cautious aligns with the CBI's outlook hitting its lowest since December 2025, reinforcing the theme of softening confidence.
For those with diversified portfolios, the key takeaway is to stay focused on long-term fundamentals rather than reacting to short-term survey data. The flat open is a reminder that markets are constantly pricing in new information, and periods of caution can create opportunities for disciplined investors. As always, it pays to understand the businesses you own and how they are positioned to navigate changing economic conditions.
Looking ahead, investors will be watching for further data on UK GDP, inflation, and corporate earnings to gauge whether the cautious mood in the survey translates into actual economic weakness. The Haleon-Thorne story, meanwhile, adds a layer of intrigue and could spark more M&A in the consumer health space, offering potential upside for shareholders of target companies.
