FTSE 100 Experiences Strongest Year Since 2009 with Notable Sector Performances and Corporate Restructurings in 2025
In 2025, the FTSE 100 rose by 21.5%, marking its best 12-month performance since 2009, although it closed just below the 10,000 mark.
Key drivers behind this growth included the defence and mining sectors. Rolls-Royce benefited significantly from NATO defence spending, while Fresnillo's value nearly quintupled. AstraZeneca contributed with a rise of about 30%, supported by strength in the pharmaceutical industry. Banks saw positive impacts due to low default rates and falling interest rates.
National Grid and SSE also experienced gains amid regulatory funding aimed at upgrading the UK's transmission grid.
Over a three-year period including dividends, the average annual performance was about 14%, with a cumulative rise of 48%, indicating an ongoing broader uptrend beyond 2025. Valuation remained attractive by historical standards, with the FTSE trading at just under 10 times next year's earnings in spring 2024.
A notable trend in the market was the emphasis on share buybacks. Approximately 55% of large UK companies repurchased at least 1% of their shares in the last year, compared to 40% in the US. Shell led with over 20% of its equity bought back since 2020.
However, there are potential risks due to concentration at the top and relatively limited exposure to technology sectors, which could impact the index if key sectors reverse.
Several significant corporate restructurings and strategic moves took place: Unilever spun off Magnum in 2025; GSK had spun off Haleon in 2022; Smiths Group is considering a break-up; BP is pivoting away from renewables; Anglo American completed a nearly US$50 billion merger with Teck Resources; and AB Foods explored splitting Primark from its food and ingredients business.
Sue Noffke of Schroders observed a shift in the UK market from a focus on dividend yields towards a share-buyback-led, cash-rich, investor-friendly regime.
