The UK's premier stock market index, the FTSE 100, has delivered its most impressive annual performance since the recovery from the global financial crisis, providing a powerful case for British investment. In a remarkable year, the index of London's largest listed companies climbed a staggering 1,758.36 points, representing a gain of 21.5 per cent across 2025.
Outperforming Global Peers
This robust growth allowed the FTSE 100 to outpace several major international indices. While Europe's Stoxx 600 rose 16.7 per cent and America's S&P 500 gained 17 per cent, the UK blue-chip index matched the tech-heavy Nasdaq Composite's 21 per cent rise. The surge marks a fifth consecutive year of gains and means the index has risen in eight of the past ten years, though such substantial returns are exceptional. The last comparable performance was in 2009, when it rose 22.1 per cent in the aftermath of the financial crash.
Dan Coatsworth, head of markets at AJ Bell, noted the FTSE 100 "has had precisely the right ingredients desired by investors in a year full of political, trade and market uncertainty." He emphasised that this success is "not a flash in the pan," highlighting that the index has averaged annual gains of around 9.1 per cent over the past decade including dividends.
Sector Leaders and Geopolitical Turbulence
The driving forces behind this growth were clear. Mining, defence, and financial stocks led the charge, with standout performances from individual companies. Precious metal producer Fresnillo saw its share price rocket approximately five-fold, while gold miner Endeavor Mining's shares nearly tripled. In the defence sector, heightened geopolitical tensions buoyed firms like Rolls-Royce and Babcock, whose share prices roughly doubled. In finance, Lloyds Banking Group led a rally with its share price nearly doubling over the year.
This success unfolded against a challenging backdrop of domestic and global uncertainty. The year witnessed significant volatility, including a dramatic market drop in early April following former US President Donald Trump's announcement of planned global tariffs. The FTSE 100 suffered its biggest single-day fall since the COVID-19 pandemic began during this event, though it subsequently recovered all losses.
London's Market Paradox: Gains Amid Exodus
Despite the index's strength, 2025 also saw a notable trend of companies leaving the London Stock Exchange. High-profile takeovers led to the delisting of Direct Line by Aviva in a £3.7 billion deal and Britvic by Carlsberg. Furthermore, companies like Indivior and fintech Wise announced plans to shift their primary listings to the United States.
However, there was a silver lining for London's market prestige. IPO activity showed signs of recovery, with 11 new listings raising a total of £1.9 billion – the highest annual proceeds since 2021, according to PwC analysis.
The index closed 2025 at 9,931.38, having shattered record highs repeatedly and brushing close to the historic 10,000-point mark. This performance, achieved despite a stagnant UK economy, political shifts, and global trade worries, underscores the market's resilience and offers a compelling advertisement for long-term investing in UK equities.
