Important note: This article is for general information and education only. It doesn’t take into account your personal circumstances and is not investment advice. Always do your own research and consider speaking to a regulated financial adviser before buying or selling any shares.
UK stock market today: why December 2025 is interesting for investors
As of 8 December 2025, UK equities are back on global investors’ radar. The FTSE 100 is up close to 20% year-to-date, outpacing many other developed markets in local-currency terms and helped by a weaker pound that boosts overseas earnings. [1]
Several forces are driving renewed interest in UK shares:
- Easier monetary policy: With inflation easing from its 2022 peak, the Bank of England has cut interest rates multiple times since 2024, taking borrowing costs to their lowest level in more than two years and supporting equity valuations. [2]
- Fresh momentum in the FTSE 100: The blue‑chip index hit new record highs in August and again in November, even as domestic growth data remained mixed. [3]
- Global capital rotating to the UK: Some large institutional investors, including UK pension funds, have been trimming exposure to richly valued US tech stocks and reallocating capital to the UK and parts of Asia amid concerns about an AI‑driven bubble in US equities. [4]
- Valuation discount vs the US: UK stocks still trade at a notable discount to US peers even after this year’s rally. Analysts at several global houses (including Franklin Templeton and others) argue that discount could narrow in 2026–27 as earnings growth improves and global investors rebalance. [5]
Today specifically, UK markets are fairly calm. The FTSE 100 is hovering near recent highs, with investors watching both the US Federal Reserve and the BoE, which are widely expected to deliver further modest rate cuts this month. [6]
Against this backdrop, many investors are asking a familiar question: what are the best UK stocks to buy now? Below is a look at seven widely followed FTSE names that feature prominently in recent analyst reports and “best UK shares” lists as of December 2025, plus a few extra blue‑chip ideas.
Again, these are not personal recommendations, but a curated starting point for your own due diligence.
7 of the best UK stocks to watch now (December 2025)
1. Rolls‑Royce Holdings (LSE: RR.) – defence & nuclear growth after a spectacular run
Rolls‑Royce has been one of the stand‑out winners of the UK market over the past few years. From its crisis lows, the share price has risen by roughly 700% over five years, and by around 80–90% in 2025 alone before a recent pull‑back. [7]
That rally has been underpinned by a genuine improvement in the business:
- In the first half of 2025, underlying revenue grew 13% to about £9.1bn, while underlying operating profit jumped 50% to roughly £1.73bn, beating expectations and driving the market value past £90bn over the summer. [8]
- Management has reinstated the dividend and launched a £1bn share buyback, signalling confidence in future cash flows. [9]
- A recent trading update in November described conditions as “strong”, with full‑year results due in February 2026. [10]
Crucially for long‑term investors, Rolls‑Royce is also leaning into the energy transition. On 5 December 2025, the company announced a strategic collaboration with Assystem, AtkinsRéalis and Frazer‑Nash to help scale its small modular nuclear reactor (SMR) ambitions in the UK and internationally. [11] That complements its core aerospace and defence businesses at a time when NATO countries are still increasing defence and energy‑security spending.
Why investors are watching it now
- Still‑elevated but more reasonable valuation: ValueWalk recently noted the shares trade on around 17x earnings, below the c. 30x average of many global aerospace peers, despite much stronger recent growth. [12]
- Structural demand tailwinds: higher defence budgets, continued recovery in long‑haul travel, and potential upside from SMRs if the UK and other governments push ahead with new nuclear build‑outs. [13]
Key risks
- After such a huge rally, sentiment can turn quickly; indeed, the share price has recently slipped about 10% from the highs as investors bank profits. [14]
- Defence spending is ultimately political, and big capital‑intensive projects like SMRs carry execution and regulatory risk.
2. GSK plc (LSE: GSK) – big pharma with upgraded guidance and oncology momentum
Drugmaker GSK is a classic FTSE 100 defensive that’s started to show more growth flair.
In Q3 2025, GSK reported:
- Sales of roughly £8.5bn, up 7–8% year‑on‑year depending on currency basis.
- Strong contributions from specialty medicines (up around 16%), including respiratory and inflammation franchises, and oncology, which grew nearly 40%. [15]
On the back of that performance, management upgraded 2025 guidance, now expecting 6–7% sales growth and 10–12% growth in core EPS, versus earlier, more cautious targets. [16]
The growth story is supported by pipeline news:
- At the ASH haematology meeting (6–9 December), GSK is presenting new data across its blood cancer portfolio, including further results from its DREAMM programme for multiple myeloma, which it says could help improve remission durations. [17]
There are also important policy developments for the sector. The UK and US have agreed a zero‑tariff deal on pharmaceuticals: the NHS will ultimately pay significantly more for innovative medicines, but UK‑made drugs will be shielded from certain US tariffs, and the rebate rate drugmakers must pay back to the NHS is being cut. [18] At the same time, the UK government is inviting executives from AstraZeneca, GSK and others to help redesign domestic drug‑pricing rules. [19]
Why investors are watching it now
- GSK trades on about 13x earnings, below many global pharma peers, yet offers both pipeline‑driven growth and a dividend yield around the mid‑3% range alongside an active share buyback programme. [20]
- The combination of positive clinical data, upgraded guidance, and potential for more predictable pricing rules in the UK supports the case for steady earnings growth into the late 2020s. [21]
Key risks
- Regulatory changes to pricing can still bite, especially if future governments push back against higher NHS drug costs.
- As with any pharma company, there is ongoing pipeline and patent‑expiry risk, and clinical setbacks can cause sharp share price moves.
3. Barclays (LSE: BARC) – UK banking champion with buybacks and possible M&A
After years in the doldrums, Barclays has staged a powerful comeback in 2025.
According to recent analysis, the shares have:
- Gained over 50% year‑to‑date,
- Risen about 65% in the last 12 months,
- And still trade on roughly 10x earnings, below many global banking peers. [22]
Barclays also offers a modest but growing dividend – around 2% currently, with some analysts projecting it could reach the mid‑5% range by 2026 if payout plans are delivered. [23]
In early December, the Bank of England gave UK banks another boost by easing certain capital requirements after they passed stress tests. On 2 December, the FTSE 100 rose about 0.4%, with major lenders including Barclays up around 1–1.5% as investors digested the friendlier regulatory stance. [24]
Barclays is also actively reshaping its balance sheet:
- The bank is in the middle of a share buyback launched in late October and disclosed today that it purchased and cancelled more than 2.27m shares on 8 December, part of a broader capital‑return programme to shrink share count and boost per‑share metrics. [25]
- Reuters reports that Barclays is exploring a bid for wealth manager Evelyn Partners, potentially valued at more than £2.5bn, as it looks to deepen its position in mass‑affluent wealth management. Other banks such as NatWest and Lloyds are also said to be interested. [26]
Why investors are watching it now
- Barclays gives exposure to UK and global banking, investment banking, credit cards and wealth.
- A combination of buybacks, rising dividends and improved capital rules can materially lift returns on equity if credit losses remain contained. [27]
Key risks
- A sharper‑than‑expected slowdown in the UK or global economy could drive higher loan losses.
- Regulatory and conduct risks remain a constant overhang for large universal banks.
4. easyJet (LSE: EZJ) – cyclically depressed, but earnings are recovering
Budget airline easyJet remains a classic UK cyclical: highly sensitive to fuel prices, consumer confidence and geopolitical disruption.
Despite those challenges, the fundamentals have improved markedly:
- A January trading update showed a 52% year‑on‑year improvement in Q1 performance versus the prior year, with passenger numbers and capacity both rising and unit costs (especially fuel) falling. [28]
- In results for the 12 months to 30 September 2025, easyJet reported around 9% earnings growth, with its holidays business continuing to gain share. [29]
Yet sentiment is still fragile. ValueWalk highlighted that the shares were down about 13% this year at the time of its November update, partly because of warnings over higher fuel costs and French air‑traffic‑control strikes. [30] A fresh article today notes that easyJet remains one of the FTSE 100’s big under‑performers, with the market cap down almost 10% since December 2024, and asks whether that makes it one of the index’s biggest bargains. [31]
Analysts remain relatively constructive: of around 20 brokers covering the stock, most rate it buy or hold, and consensus 12‑month price targets imply notable upside from current levels. [32]
Why investors are watching it now
- easyJet offers geared exposure to European travel demand at a time when real incomes are starting to recover as inflation falls.
- If management continues to grow the higher‑margin holidays business and keeps a tight lid on costs, earnings can grow faster than passenger volumes. [33]
Key risks
- A recession in the UK or Europe could hit leisure travel hard.
- Airlines are structurally vulnerable to shocks (strikes, fuel spikes, pandemics, security events), so position sizing is critical.
5. Legal & General Group (LSE: LGEN) – one of the FTSE’s biggest income plays
For investors focused on dividends, Legal & General is hard to ignore.
Recent data suggest:
- The shares currently yield around 8.5–8.6% based on the 2024 dividend and a share price just under £2.50 in early December. [34]
- Forecasts point to a further modest increase in the payout through 2025–26, with some estimates implying a yield close to 10% if dividends grow as planned and the share price stays around current levels. [35]
ValueWalk notes that Legal & General has increased its dividend steadily since the 2008–09 financial crisis, and management is currently targeting over £5bn of capital returns (dividends plus buybacks) to shareholders over a three‑year period. [36]
Strategically, new CEO António Simões is:
- Simplifying the group by selling non‑core businesses to focus on insurance, pensions and asset management, and
- Arguing for reforms that would increase long‑term retirement saving and unlock more capital for UK investment.
In an interview published today, he proposes raising the minimum auto‑enrolment pension contribution from 8% to 12% over six years, a move that a report commissioned from Oxford Economics suggests could add £220bn to long‑term investment and lift GDP. [37]
At the same time, he has warned that uncertainty around UK budget policy has weighed on investor sentiment and that Legal & General must “do better” at explaining its strategy to the market. [38]
Why investors are watching it now
- Legal & General offers one of the highest yields in the FTSE 100, backed by a long history of payouts and diversified cash flows from annuities, pension risk transfer, asset management and housing/infrastructure projects. [39]
- If UK pension reforms move in the direction Simões advocates, the company could be a major beneficiary of higher contributions and a growing pool of long‑term capital. [40]
Key risks
- High yields in financial stocks can signal perceived risk; if solvency, credit or longevity assumptions move against Legal & General, dividends could come under pressure.
- Regulatory and political changes in pensions and insurance can materially affect capital requirements and profitability.
6. Vodafone Group (LSE: VOD) – restructuring at home, doubling down on African growth
Telecom giant Vodafone has spent the past few years in turnaround mode, and 2025 is the first year in a while where the story looks more optimistic.
ValueWalk highlights that the shares are up around 26% so far this year, marking the first sustained bullish run since 2022. [41] That improvement reflects some big strategic moves:
- Vodafone has exited underperforming Italian and Spanish operations, raising around £10bn in cash. [42]
- In May 2025, it completed the merger of Vodafone UK with Three UK in a £16.5bn deal, creating the country’s largest mobile network with more than 28m customers and significant synergy potential. [43]
- Management has halved the dividend to a more sustainable level, but the stock still yields around 4–4.5%, and a share buyback programme of up to €500m is underway. [44]
Recent news flow has focused on Africa, a key growth engine:
- Vodafone’s African subsidiary Vodacom has agreed to acquire an additional stake in Safaricom, Kenya’s leading telecom operator, lifting effective control to around 55% via purchases from both the Kenyan government and Vodafone itself, in a deal worth roughly €1.8bn. [45]
On the numbers side, Vodafone released half‑year 2026 results (covering the six months to 30 September 2025) in November, confirming progress on its transformation and pointing investors to detailed financials via its investor‑relations site. [46]
Broker sentiment is slowly improving too. A note published today from Barclays raised its price target on Vodafone, citing expected synergies from the UK merger and a “challenger” strategy in broadband, and implying nearly 28% upside from the 5 December closing price. [47]
Why investors are watching it now
- Vodafone provides a mix of defensive cash flow (from mobile and broadband) and emerging‑market growth (through Safaricom and African fintech assets such as M‑Pesa).
- If management can execute on cost savings and network rationalisation, the combination of moderate growth, improving margins and a reset dividend could be attractive at today’s valuation. [48]
Key risks
- Integration risk from the UK merger and network‑sharing arrangements.
- Competitive and regulatory pressures in core European markets, especially Germany.
- Emerging‑market currency and political risks tied to Safaricom and other African assets.
7. Marks & Spencer Group (LSE: MKS) – retail turnaround with a cyber‑risk reminder
Marks & Spencer (M&S) has been one of the more dramatic UK retail stories of this cycle.
After years of disappointment, the share price hit near‑record lows in October 2022 before embarking on a powerful turnaround, with the stock up more than 270% between then and early 2025 on the back of stronger food and clothing performance. [49]
That momentum was badly interrupted this year by a major cyberattack over Easter:
- The incident disrupted online sales and left some shelves empty, costing M&S an estimated £300m and nearly wiping out its statutory profit in the first half of its 2024/25 financial year. [50]
- Reported profit before tax dropped about 99% year‑on‑year to just over £3m, even though revenue rose by more than 20% to nearly £8bn thanks to resilient demand in food and certain clothing categories. [51]
Despite that shock, management has kept its turnaround plan intact:
- The company is pressing ahead with store modernisation and a push to win another 1 percentage point of UK food market share by 2028, while targeting food operating margins above 4%. Recent results show food margins already above that level. [52]
- M&S has also been expanding internationally and burnishing its sustainability credentials. Recent announcements include launching M&S Food ranges in Australia via Coles supermarkets and the RE:Spark programme to accelerate renewable electricity adoption across its fashion supply chain. [53]
- Shareholders received a 20% increase in the interim dividend, a sign that management sees the cyberattack as a setback, not a permanent reset of profitability. [54]
Analysts at several banks and brokers now talk about M&S “regaining momentum” as it recovers from the hack and continues to win market share from rivals. [55]
Why investors are watching it now
- M&S offers exposure to UK consumer spending with both a strong food franchise and a more fashion‑forward clothing business.
- If the turnaround continues and cyber‑security risks are better contained, there is still room for margin expansion and further dividend growth over the medium term. [56]
Key risks
- Consumer‑discretionary exposure: a squeeze on real incomes could hit clothing and homeware sales.
- Operational and cyber‑security risk remains in focus after this year’s attack.
Other high‑quality UK blue‑chip shares to consider
The seven stocks above feature heavily in recent “best UK stocks to buy now” lists and analyst commentary, but they’re not the whole story. For diversification, many investors also look at established FTSE 100 stalwarts, including:
- AstraZeneca (AZN) – A global pharma leader with a deep pipeline and strong oncology and vaccines franchises.
- Shell (SHEL) and BP (BP.) – Large, cash‑generative integrated energy firms that combine high dividends with ongoing investment in lower‑carbon projects.
- Unilever (ULVR) – Consumer‑staples giant with a broad household‑brands portfolio, often used for defensive income exposure.
- RELX (REL) – Information and analytics group with strong recurring revenues and structural growth.
- British American Tobacco (BATS) and Diageo (DGE) – Tobacco and premium spirits respectively, both long‑time dividend payers (with very different ESG profiles).
- London Stock Exchange Group (LSEG) and Rio Tinto (RIO) – Market‑infrastructure and mining plays that give exposure to trading volumes and commodities cycles.
These names appear together in several lists of “top FTSE 100 stocks to watch in 2025”, reflecting their size, liquidity and global earnings bases. [57]
How to decide if these “best UK stocks” are right for you
Before buying any UK share – even a widely admired FTSE 100 name – it’s worth stepping back and checking a few basics.
1. Match investments to your time horizon
- Equities are long‑term assets. Shares can be very volatile over months or even a couple of years. Many financial planners suggest at least a 5‑year horizon for stock investments.
- Shorter horizons may be better served with cash, gilts, or diversified funds rather than individual shares.
2. Diversify across sectors and themes
Even within the UK:
- Don’t put everything into one theme – e.g. just defence (Rolls‑Royce), just financials (Barclays, Legal & General), or just consumer (M&S, easyJet).
- A more balanced UK portfolio might combine:
- Growth: Rolls‑Royce, Vodafone, selected mid‑caps.
- Defensive income: GSK, Legal & General, consumer staples like Unilever.
- Cyclicals/value: easyJet, banks, select miners or housebuilders.
You can also consider blending individual shares with UK equity funds or ETFs to diversify further.
3. Focus on valuation, cash flow and balance sheet
For each stock you research, ask:
- Is the valuation (P/E, price‑to‑book, dividend yield) reasonable relative to:
- Its own history?
- Close peers?
- Does the company generate consistent free cash flow to support dividends and investment?
- Is debt manageable, especially in higher‑rate environments?
The appeal of stocks like Legal & General or some high‑yield FTSE 100 names is their generous dividends, but high yields can be a warning sign if they’re not well‑covered by cash flow.
4. Use tax‑efficient wrappers if you’re eligible
If you’re a UK‑based investor, you may be able to:
- Hold UK shares in an ISA so capital gains and dividends are tax‑free under current rules.
- Use a SIPP or other pension wrapper for long‑term retirement investing.
Tax rules can change and depend on your personal circumstances, so it’s sensible to check with a qualified tax adviser or financial planner.
5. Stay on top of the news and updates
As today’s news flow shows, UK share prices are heavily influenced by:
- Central bank moves (BoE and Fed decisions on rates). [58]
- Regulatory changes (for example drug‑pricing deals, bank capital rules, or pension reforms). [59]
- Company‑specific shocks (like M&S’s cyberattack or big M&A announcements at Barclays and Vodafone). [60]
Building a simple routine – such as checking company RNS announcements, quarterly updates and a trusted financial‑news feed – can help you react thoughtfully rather than emotionally.
Bottom line
The UK stock market in December 2025 is in an unusual but potentially attractive position:
- Valuations remain discounted relative to the US,
- The FTSE 100 has delivered strong year‑to‑date gains yet still offers higher average dividend yields than many peers, and
- Investor interest is returning as global allocators look for opportunities outside stretched US tech. [61]
Shares like Rolls‑Royce, GSK, Barclays, easyJet, Legal & General, Vodafone and Marks & Spencer capture a cross‑section of the themes driving that story – from defence and healthcare to banking, travel, pensions and retail – and they feature prominently in recent lists of the “best UK stocks to buy now” published by reputable financial outlets. [62]
But “best” always depends on you: your risk tolerance, time horizon, existing portfolio and financial goals. Use this list as a starting point for deeper research, not a ready‑made shopping list – and remember that even great companies can be poor investments if bought at the wrong price, in the wrong size, or for the wrong reasons.
References
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