Six key trends shaping UK-US bilateral investment

The UK-US investment corridor entered 2025 in a less predictable world. Tariff volatility, geopolitical fragmentation and higher capital costs might have been expected to dampen cross-border investment. Instead, they changed its character. Investors did not abandon the corridor; they became more selective about how they used it.

In 2025, the corridor recorded 570 projects and US$43.4 billion in capital investment, creating approximately 55,000 jobs. US-to-UK projects rose 2.3% year-on-year. UK-to-US project volumes declined 15%, but their value increased 48%. This pattern of fewer projects and larger commitments appeared across sectors and geographies, signaling a deliberate transition from volume-led to value-led investment strategies.

Per-project metrics underscore the shift. Between 2023 and 2025, average capital investment per project rose 77% for UK-to-US FDI and 51% for US-to-UK FDI. Jobs created per project increased 64% and 30%, respectively. The figures suggest a more disciplined market. In simple terms, investors are writing larger checks but for fewer projects and after more scrutiny.

This disciplined approach stands out against global trends. Globally, new investment projects declined 16% in 2025, according to UNCTAD data.¹ The UK-US corridor’s relative stability reflects the depth of institutional ties, regulatory alignment and commercial interdependence between the two economies. Recent bilateral frameworks, such as the UK-US Technology Prosperity Deal, the Economic Prosperity Deal and the critical minerals partnership, provide additional confidence by reducing policy uncertainty in strategically important sectors.

Last year’s performance reflects the depth of UK-US commercial ties, as well as the way those ties are evolving in a changing global economy.

“The importance of the UK as a trade partner for the US is not only seen at the national level now, but increasingly at subnational and city-regional levels,” says Tony DeLisi, EY US Economic Development Advisory Services Leader.² “The UK has entered into mutual cooperation agreements with around 10 US states, while city-region economic development organizations have established a growing number of offices and partnerships across US cities.”

The UK as a disproportionate source of inward investment

The UK’s share of inward investment to the US is disproportionately significant, accounting for nearly half of all projects (44%), capital investments (48%) and job creation (48%). This outsized performance reflects the particular strengths of the British economy: deep institutional capital, global ambition and sustained excellence in technology, life sciences, financial services and advanced manufacturing.

“The UK continues to punch above its weight as a source of US investment,” said Peter Arnold, EY UK³ Chief Economist. “UK businesses and investors have always looked outward. The US offers the scale and dynamism to convert the UK’s capital depth, global expertise and focus on high-value sectors into sustainable, long-term growth. What’s changed is precision. Capital is deployed with sharper intent.”

Capital flows signal investor priorities. In 2025, four investment vectors dominated the UK-US corridor: manufacturing capacity in the US, digital and AI infrastructure in the UK, software and technology platforms across both markets, and the expansion of established operating footprints.

Manufacturing: from cost arbitrage to strategic positioning

UK-led FDI into US manufacturing rose 23% in 2025 and stands 171% higher than 2023 levels. The acceleration reflects a practical reassessment of supply chains. UK manufacturers are putting capacity closer to North American demand, reducing exposure to tariffs and shortening delivery times. The case for investment is increasingly operational as much as financial.

Technology and digital infrastructure: the AI imperative

Technology attracts sustained high-value investment across the corridor. Software and IT projects increased 24% for US-to-UK investment and 15% for UK-to-US investment in 2025, even as overall investment became more selective. Both governments have signaled technology as a priority. The UK-US Technology Prosperity Deal,⁷ valued at £31 billion⁸ and announced in 2025, explicitly targets AI, quantum computing, semiconductors and digital infrastructure.

Data centers have become a particularly significant capital vector, especially for UK-bound investment. Hyperscale infrastructure for AI and cloud computing is now viewed as foundational public goods, comparable to transport or energy infrastructure. Investors deploying capital into data centers are not building discrete assets; they are building the compute backbone of future innovation.

Life sciences: combining R&D excellence with manufacturing scale

Life sciences investment, particularly in the US, reflects both the sector’s enduring attractiveness and its capital intensity. R&D expertise in the UK combined with manufacturing scale and market access in the US creates a powerful investment case. UK-to-US capital investment in pharmaceuticals increased 131% year-on-year and more than 3,700% between 2023 and 2025.

Expansion projects: the hidden growth story

Expansion projects, which deepen existing operating footprints rather than establishing new operations, accounted for 38% of the value of UK-to-US FDI in 2025, despite representing only 21% of project volume. Meanwhile, US investment into the UK is likewise shifting toward expansions, with project numbers growing and registering double-digit growth in both capital and job creation. This concentration signals investor confidence in existing operations and preference for de-risk strategies.

UK companies showed particular commitment to expansion, with project numbers growing 20% between 2023 and 2025. The logic is straightforward. It is usually easier to add capacity where a company already has customers, suppliers, managers and regulatory familiarity than to build from scratch.

“By investing in their American operations, UK companies are showing confidence in the dynamic US economy,” said Lynlee Brown, EY US Global Trade Advisory Leader. “These large capital commitments are premised on a fundamental belief that even mature and successful businesses have plenty of runway for growth.”

Four forces are changing how capital moves across the Atlantic: trade uncertainty, geopolitical alignment, sector-specific industrial policy and a higher bar for returns.

Trade volatility and supply chain resilience

Tariff uncertainty and trade tensions have accelerated conversations around supply chain localization. Rather than diversifying into new geographies, many companies are consolidating operations in trusted markets. The UK-US corridor benefits from this logic: Both economies have stable regulatory environments, established commercial relationships and institutional credibility. Manufacturing investment in the US by UK firms serves a dual purpose: accessing the US market directly and positioning products for export to other destinations with reduced tariff exposure.

“The findings align with our clients’ more strategic responses to current trade volatility and longer-term structural changes to the trading environment,” said Marc Bunch, EY UK&I Global Trade Leader.

Geopolitical realignment: the trusted capital corridor

Global capital is increasingly flowing along lines of geopolitical alignment. The UK-US corridor is positioning itself as a “trusted capital” ecosystem — a partnership between two democracies with aligned interests, shared rules-based commitments and long-standing institutional ties. This matters for capital allocation decisions, particularly in sensitive sectors like AI, semiconductors, critical minerals and defense.

Sectoral policy alignment

Large capital projects need a long line of sight. In technology, advanced manufacturing, life sciences and AI, both governments have sent clear signals about where they want private capital to flow. Where policy support overlaps with commercial demand, projects become easier to finance, approve and scale. Tax incentives, permitting acceleration, infrastructure investment and skills development programs all matter at the margin. But the deeper signal is predictability. Investors deploying large capital commitments need confidence that the competitive environment will remain stable and that policy will remain supportive. The UK-US corridor provides that confidence more credibly than most alternative destinations.

PE and M&A: disciplined capital, clear value

PE and M&A activity across the corridor has become more disciplined. Investors are prioritizing quality assets, durable demand, technology-enabled growth and clear paths to value creation. Overall investment levels remain close to 2023 levels, reflecting a market shaped by interest rates, valuation expectations and exit conditions.

UK-based PE firms reduced US investments in 2025 compared to a very active 2024. By contrast, PE deals led by US firms targeting UK companies increased in volume. Technology remained the leading sector for US PE investment into the UK, with finance, professional services, and building and construction recording gains since 2024.

“Markets are stabilizing, with investors becoming more disciplined in approach and priorities,” said Ivan Lehon, EY Global Private Equity Leader. “The strongest activity concentrates where investors see durable demand, technology-enabled growth and a clear path to value creation.”

M&A-related capital flows proved resilient, with UK-US deal volumes easing by less than 5%, broadly in line with global cross-border trends.

Software firms saw a notable uptick in UK-led M&A deals in 2025, increasing 21% since 2024.

There are clear actions for both public sector and business leaders to take to help strengthen future investment.

Five considerations for public sector leaders

1. Incentives matter: Our results demonstrate that investors respond to sector-specific policy incentives (e.g., tax credits, permitting fast-tracks, co-investment).
2. Opportunity in expansions: Promoting reinvestment (e.g., through retrofit grants, faster site approvals, infrastructure upgrades) can anchor long-term capital and boost job creation.
3. Importance of infrastructure: Markets that provide what the industries of the future require (e.g., power, land, grid connections, STEM talent) will attract more investment.
4. Policy and regulation alignment: Aligning regulatory frameworks (e.g., in digital, data, financial reporting) can reduce cross-border friction and deliver the predictability investors want.
5. Capitalize on existing advantage: With global FDI volumes declining, consider ways to promote the relative resilience of UK-US investment to investors seeking stability and scale.

Five considerations for business leaders

1. Assess existing footprints as platforms for growth: Expanding existing operations can accelerate scale and amplify returns, with lower execution risk than greenfield entry.
2. Align investments to policy: Mapping capital flows to government priorities (e.g., reindustrialization, AI, climate transition) can unlock incentives, reduce risk and boost long-term returns.
3. Capitalize on sector-specific opportunities in PE and M&A: As overall volumes stabilize, companies and sponsors should maintain disciplined underwriting but be agile in identifying and seizing opportunities.
4. Holistically evaluate transatlantic opportunities: UK-US investment decisions are best viewed within the context of broader growth, innovation and resilience strategies.
5. Drive regulatory strategy at the board level: Because regulatory certainty is nearly as important as market access, senior leaders should actively manage tax, data, competition, national security and industrial policy risk.

What happens next?

Emerging investment vectors and forward priorities

The next phase of the corridor will be shaped by a harder competition for capital. AI infrastructure, industrial incentives, friendshoring, defense supply chains and critical minerals will all matter. The common thread is clear: Investors will favor markets that offer scale, policy stability, infrastructure and trust. The AI infrastructure race will continue to gather momentum.

The race for AI infrastructure capacity is now a core component of competitive advantage. Both the UK and the US recognize this and are deploying policy and capital to secure hyperscale data center deployment. This competition will intensify. The UK, through initiatives like the AI Infrastructure initiative, is positioning itself as a hub for European AI compute. The US is prioritizing domestic semiconductor and infrastructure capacity. The UK-US corridor will benefit from this dynamic, as companies seek to deploy infrastructure across both jurisdictions to serve transatlantic and global markets.

1. Industrial policy competition: Government incentives are playing a sizable role in capital deployment decisions, where companies are weighing up public support alongside commerciality. The UK-US corridor stands out in its ability to offer backing for strategic sectors in both countries.
2. Reshoring and friendshoring: Capital is increasingly flowing into trusted markets like the UK-US corridor, while companies look to reduce supply chain and geopolitical risks. They are now focusing on manufacturing, capability-building and expansion in geographies they see as stable and strategically aligned.
3. Defense and critical minerals: As UK and US policy commitments to secure defense, semiconductors and energy transition inputs grow, defense industrial investment and resilient critical minerals supply chains are becoming increasingly important areas for capital deployment.
4. Life sciences scaling: Life sciences investment will continue to scale, particularly as companies combine UK R&D expertise with US market access and manufacturing capacity.
5. Energy transition manufacturing: Set to become a significant area of investment across the UK-US corridor, energy transition manufacturing companies are combining UK engineering and innovation with the strengths of US manufacturing incentives and market demand. Investments here will help to build more resilient clean energy supply chains.
6. Capital concentration into trusted markets: Capital will likely continue flowing toward trusted and policy-stable markets. The UK-US corridor is well placed to benefit from this trend, as companies look for legal certainty, clear industrial policies and reliable infrastructure.

Conclusion

According to EY research, the special investment relationship between the US and UK remains one of the world’s most resilient, economically significant and strategically aligned bilateral capital trade corridors. In the face of global uncertainty, both business leaders and investors across the Atlantic remain steadfast in their commitment to this partnership and see clear value and further opportunities for growth.

Our findings also indicate that the investment corridor is evolving and becoming more targeted, capital intensive and directed toward strategic sectors. Technology, advanced manufacturing, digital infrastructure and life sciences have all become priority investment sectors, and this is likely to characterize the coming decades of investment.

This shift from volume to value points to a more disciplined and confident investment environment, where companies are becoming more thoughtful in their capital deployment decisions and creating lasting competitive advantage. As policy priorities become more aligned, friction and uncertainty are beginning to ease off. This is allowing the transatlantic relationship to evolve around the sectors and capabilities that will contribute most to future growth.

The UK and US can sustain this momentum by focusing on competitiveness, infrastructure, talent and regulatory clarity. Ultimately, this will strengthen one of the world’s most important investment relationships. It is clear that investors are already making these moves, but the task for policymakers and business leaders is to make the corridor more competitive, dynamic and scalable.

Summary

The UK-US bilateral investment relationship is rooted in centuries of shared history, deep economic and financial ties. It is now entering a more strategic phase, shifting toward larger, higher value deals as companies and institutional investors prioritize resilience, scale and long-term positioning. Capital is increasingly concentrated in manufacturing, technology and life sciences. Expansion of existing operations is also accelerating, signaling confidence in established operations. As competition for capital intensifies, investment decisions are increasingly shaped by policy alignment, incentives, infrastructure readiness and regulatory certainty, with capital concentrating in trusted, policy-stable markets.