The UK regions favoured by investors
London maintained its status as the largest recipient of inward investment in 2024/25, attracting 427 new projects – almost a third of the national total – consistent with its top ranking in the Investment Attractiveness Index. However, this figure represents a 15% decline from 503 projects the previous financial year.
The West Midlands ranks second with 130 projects, supported by Birmingham’s status as the UK’s second largest city and also partially due to its central location within the West Midlands Investment Zone.
This strong performance aligns with the wider Index’s positive assessment of the West Midlands, where cities in the West Midlands (Solihull and Stoke-on-Trent) were amongst the top risers in the latest iteration of the Index.
That said, while the West Midlands has somewhat resisted this year’s trend of decline by staying put, it experienced a significant drop two years ago and appears subdued relative to its trend.
In contrast, Northern Ireland and Wales saw substantial growth, though they make up a small proportion of UK FDI.
Table 1: Inward investment projects by region, 2024/25
Figure 3: Heat map of ITL1 distribution of inward investment projects, 2024/25
Figure 4: Heat map of ITL2 distribution of inward investment projects, 2024/25
Contextualising the UK’s inward investment performance
The trends outlined above reflect a broader decline in European competitiveness, as a combination of high borrowing costs and sluggish growth take a toll on investment. The UK has not been immune to these headwinds.,Meanwhile, the USA continues to outpace its peers, carried forward by its post-pandemic growth and, more recently, momentum in its technological sector following the AI boom.
In contrast, Europe as a whole has struggled to build a similarly competitive technological sector, constrained by a weaker funding ecosystem and a less dynamic start-up environment.
More pertinently, within Europe, the UK stands out for its particularly sharp decline in attracting inward investment. EY’s in-house economic statistics show that new FDI projects fell by 13.4% in 2024, more than double the 5.5% decline across the continent. Moreover, only 24% of survey respondents rated the UK as among the most attractive European countries for foreign investment in 2025, down from 44% in 2022 – a far steeper decline compared to Germany or France.
This stark decline stems from macroeconomic and policy-related headwinds that have weighed on UK competitiveness. Across 2022 and 2023, the number of survey respondents stating that the UK is a more attractive place to invest within Europe fell by more than ten percentage points alone. Issues surrounding the precarious state of public finances mean that borrowing costs are amongst the highest in the G7, reinforced by persistent inflation that has led the Bank of England to delay monetary policy loosening.
At the same time, Brexit-related trade frictions have made it harder for firms to integrate their British investments into wider European supply chains, and recent hikes in corporation taxes and National Insurance Contributions have weighed down further on investment.
Nevertheless, certain UK sectors remain competitive in the European context and provide an avenue for future investment growth.
The UK’s energy mix attracts positive views from survey respondents. Its renewable energy sector is likely to benefit from the introduction of the Carbon Border Adjustment Mechanism (CBAM) in 2027, aligning taxes on carbon-intensive imports with domestic carbon pricing. But CBAM may also prove challenging for energy-intensive industries exposed to trade, where higher costs could weigh on competitiveness.
Separately, the UK’s technology sector is among the most competitive in Europe, being identified by EY survey respondents as a prime source for UK growth.