The UK retained its place because the second most tasty vacation spot in Europe for Overseas Direct Funding (FDI) in 2024, regardless of a pointy drop in undertaking quantity, based on the EY 2025 UK Attractiveness Survey.
The nation secured 853 FDI tasks final 12 months, down 13% from 2023. It adopted France, which recorded 1,025 tasks (a 14% drop), and ranked forward of Germany, the place tasks declined by 17% to 608.
Better London remained Europe’s prime area for inward funding by quantity, attracting 265 FDI tasks. However that too marked a notable lower — down 31% on the earlier 12 months.
The UK’s total share of FDI in Europe slipped to fifteen.8% in 2024, from 17.3% the 12 months earlier than. Complete European undertaking numbers fell by 5% to a nine-year low of 5,383.
“Whereas it’s encouraging to see that the UK stays one in every of Europe’s prime funding locations, it wasn’t resistant to the decline in FDI quantity that affected different giant European nations final 12 months,” stated Anna Anthony, EY UK & Eire Regional Managing Associate.
Financial headwinds and international competitors weigh on FDI throughout Europe
The report factors to Europe-wide challenges — from subdued financial progress and rising vitality costs to intensifying international competitors — as key causes for the general decline.
France grappled with political uncertainty and elevated labour prices. Germany skilled a downturn in its manufacturing sector. The UK, like its friends, noticed traders develop cautious throughout a 12 months of main home elections and rising operational prices.
In distinction, Spain, Poland, and Italy noticed undertaking numbers develop, albeit from a smaller base.
“Financial progress throughout Europe has been comparatively modest in recent times, which seems to be driving traders in the direction of extra aggressive international locations corresponding to Asia and the US,” stated Peter Arnold, EY UK Chief Economist.
High quality over amount: UK focus shifts to high-value sectors
Regardless of the headline fall in undertaking quantity, the UK noticed enhancements within the strategic worth of investments it attracted. The variety of R&D tasks rose by 32% and manufacturing tasks by 22%, the very best since 2016. Each sectors are recognised as priorities within the UK’s Industrial Technique.
The UK additionally led Europe in FDI-related job creation, with 38,196 new roles — forward of Spain (34,603) and France (29,000).
In the meantime, ‘new’ funding tasks — relatively than reinvestments or extensions — accounted for 63% of the UK’s complete, the very best proportion in Europe.
Tech stays sturdy, however sector sees sharp decline
The UK maintained its lead in software program and IT companies, securing 161 tech FDI tasks. Nevertheless, this represented a steep 37% drop from the earlier 12 months, and its share of Europe’s tech FDI declined from 27% to twenty%.
Different notable sectors for UK FDI in 2024 included:
- Transport manufacturing and aerospace: 75 tasks
- Enterprise {and professional} companies: 74 tasks
- Prescribed drugs and well being: 33 tasks every
- Retail, tourism and tradition: 31 mixed tasks
India emerges as key progress companion amid drop in US-led funding
The US remained the UK’s largest supply of funding, accounting for twenty-four% of all FDI tasks — however US-originating tasks fell by 7% year-on-year.
India, in contrast, contributed 8% of UK FDI tasks, with a notable share within the tech sector. The UK captured half of all Indian FDI into Europe final 12 months.
Australia and Singapore additionally ranked as disproportionately sturdy contributors to UK funding in contrast with their European-wide figures. The UK accounted for:
- 59% of Australian FDI into Europe
- 32% of Singapore FDI
- 18% of Canadian FDI
“The UK tends to draw FDI from a extra various vary of nations exterior Europe, supported closely by Commonwealth nations,” Arnold added.
“Strengthening financial ties with high-growth companions worldwide could allow the Authorities to take care of a resilient funding pipeline for the UK.”
