Given the scale of US investment into the UK – which is the leading European destination for American inward investment – the ‘Economic Prosperity Deal’ announced in May 2025 between the two countries has significant implications for FDI.

The agreement avoids the worst of the new American tariffs, with most products subject only to the baseline 10% rate, while key sectors such as steel, agriculture, aerospace, and automobiles benefit from a reduction in barriers. This is favourable when compared with a 15% rate for the EU and 50% rate for India, and likely means that the US will continue to be a strong source of inward investment into the UK.

In September 2025, the UK-US relationship reached a further milestone with the signing of the Tech Prosperity Deal during President Trump’s UK visit. This promises £150bn worth of US investment, with the potential to create 7,600 new jobs. It will see the two nations collaborate on key areas, including nuclear energy, quantum computing and AI in particular – a economic priority for the UK government.

Recent data from the EY 2025 UK Attractiveness Survey shows that Germany was the second largest origin of investment projects into Europe as a whole in 2024, contributing 12% of the overall total. Furthermore, within the section “FDI and the UK’s economy” in this report Germany and France are 3rd and 4th respectively as sources of UK Inward FDI – together making up 11% of the total.

In the context of increasing global uncertainty, a strong Europe has become even more important and as a result the relationship between the UK, Germany and the EU has been significantly transformed. There is a new political will and the landmark UK-EU Security and Defence Partnership agreed in May 2025 and the UK – Germany Treaty on Friendship and Bilateral Cooperation signed in July 2025 are key milestones. Treaty between the United Kingdom of Great Britain and Northern Ireland and the Federal Republic of Germany on friendship and bilateral cooperation - GOV.UK

The Treaty on Friendship and Bilateral Cooperation creates a foundation and demonstrates the intent for deeper relationships across security, trade and cultural exchange. As part of the Implementation Plan under Article 22 of this Treaty, it was agreed to deliver 17 priority projects. These projects span the breadth of the Treaty, enhancing cooperation in the face of global challenges, and delivering tangible benefits for UK and German citizens. The projects will be reviewed by a Joint Cabinet every two years. Of particular interest for businesses will be projects relating to Strategic Science and Technology Partnership, Strategic Sustainable Development Partnership, Mobility of Citizens, Education, Culture, Sport and the proposed Business-Government Forum. In the Business-Government Forum German and UK businesses will be brought together to exchange on business opportunities and to explore joint projects in order to drive growth, enabling our respective governments to draw upon the expertise and insights of our vibrant business communities.

Following these treaties, there is some careful optimism among German and UK businesses indicating a positive long-term outlook resulting in investments in the UK.