London leads Europe in tech foreign direct investment

• Greater London retained its status as the leading European region for digital technology investment in 2024, attracting 96 FDI projects.
• The UK recorded a total of 161 digital technology projects in 2024, reflecting a 37% decline from the previous year, consistent with the broader European trend.
• For the first time, India overtook the United States as the UK’s top source of digital technology investment, contributing 44 projects. 
• Investors praise UK’s skills availability and regulatory approach to data but call for improvements to startup financing and tech infrastructure

Greater London maintained its position as the leading European region for digital technology investment last year as the UK also led the rest of Europe in attracting tech-related Foreign Direct Investment, according to EY’s 2025 UK Attractiveness Survey.

The capital attracted 96 Foreign Direct Investment (FDI) projects in the software and IT services sector in 2024, more than any of the 259 European regions assessed by EY. The UK overall also remained the leading European destination for tech FDI in 2024, attracting 161 digital technology projects.  

While the capital retained its leading position, the number of tech-related FDI attracted by London in 2024 fell by more than a quarter (28%) compared to the total it secured in 2023. The UK’s overall total of digital technology FDI also declined year-on-year, decreasing by more than a third (37%) from the 255 projects secured in 2023.

This decline mirrored the broader European trend, with tech-related FDI across the continent falling from 954 projects in 2023 to 793 projects in 2024, a 17% decrease.

Tech investment remains low by historic standards across the UK and Europe

Europe and UK have both recorded a consistent decline in tech-related inward investment in recent years. As recently as 2019, the UK secured 432 digital technology FDI projects. But the UK’s year-on-year total has fallen in three out of the five intervening years. Between 2019 and 2024, tech-related FDI fell by 63% for the UK and by 46% for Europe as a whole.

While the United States has historically been the largest contributor to UK and European FDI and the most important source of tech-related inward investment specifically, there has been a consistent downward trend in US investments into Europe in recent years. This is not confined solely to the tech sector, and between 2019 and 2024 overall US FDI declined by 36% for Europe and by 46% for the UK. Over the same period, US tech-related FDI fell by 60% for Europe as a whole and by 80% for the UK specifically.

For the first time since EY began tracking European FDI project levels, India overtook the US as the UK’s leading source of tech-related inward investment, contributing 40 projects, an increase from the 36 projects it brought in during 2023. The US contributed 33 tech-related projects to the UK in 2024.

Rob Atkinson, EY UK&I Managing Partner for Technology, Media and Telecoms (TMT), said: "The UK continues to lead Europe in attracting digital investment and London’s distinct strengths, including its access to high-priority skills and funding opportunities, makes the capital an integral asset to national tech ambitions. Following a particularly strong 2023 for tech investment into the UK, a subsequent drop-off was expected. Nonetheless, a broader European decline in tech FDI, alongside declining levels of investment originating from the US, has seen project totals dip this year. Relatively modest economic growth across Europe appears to be driving investors towards more competitive global destinations such as Asia and the US.

“However, there are grounds for optimism for UK tech attractiveness in the years ahead. As the UK continues its journey back towards more moderate levels of growth, it should continue to build a strong foundation for digital infrastructure, including ongoing investments in 5G, fibre rollout, and data centres—key drivers of long-term attractiveness for tech projects and business growth.

“While the software and IT services sector has consistently led foreign direct investment in the UK over the past twelve years, we have witnessed a decline in tech FDI, particularly from the US, which has traditionally been a major source of investment. In 2019, the UK secured 432 projects from this sector, but by 2024, this number plummeted to just 161, marking a staggering decline of 62.7%.

“To counter this trend, it is crucial that we strengthen our eco-system to enhance our appeal to both domestic and international investors. By doing so, we retain our competitive edge and pave the way for sustainable growth in the technology sector. The UK still offers compelling opportunities for tech investment, and it is essential for policymakers to build on these strengths to ensure a thriving future for our digital landscape."

Capital access and workforce skills remain top priorities for enhancing the UK's digital competitiveness

Alongside an analysis of investment numbers, EY also conducted a survey comprising of interviews with a panel of 400 international investment decision-makers between January and March 2025. This found that enhancing access to capital for tech startups (37%), encouraging innovation in emerging technologies such as artificial intelligence and quantum computing (33%), and improving data and tech skills among the workforce (29%) were key areas for improvement that could bolster the nation’s position in the global technology landscape.

Additionally, respondents emphasised the importance of improving technological infrastructure, including data centers and 5G connectivity (27%), as well as promoting cross-border technological collaboration (27%).

Survey respondents were positive when comparing the UK's attractiveness to tech-related investment against international competitors. A significant 66% of respondents believe the UK has a better availability of a skilled workforce, including scientists, engineers, and data analysts. Furthermore, 59% noted the UK’s superior network of technology startups and research institutions.

While 43% and 45% of respondents believe the UK performs better or equally well in access to venture capital funding compared to other countries, there is room for improvement. The top suggestion for boosting the UK's digital competitiveness was improving access to capital for tech startups, supported by 37% of respondents.

Access to skilled AI professionals (38%) and high-quality, diverse datasets (31%) emerged as the most significant factors influencing companies' decisions to invest in AI research, development, and deployment in the UK. Additionally, access to government grants and R&D incentives (30%) and the ease of recruiting international AI talent (29%) were highlighted as critical elements for fostering a thriving AI ecosystem.

Rob Atkinson, added: "The ongoing global race for technological supremacy in artificial intelligence is a critical consideration for investors and companies contemplating AI activities in the UK. Our recent survey reveals that 38% of investors see the UK's skilled workforce as a unique selling point, providing a vital pipeline of talent that fuels the AI ecosystem. However, as we nurture this nascent sector, it is essential for policymakers to address the pressing need for high-quality and diverse datasets, which 31% of investors identified as crucial. This insight highlights the commercial value of data in shaping the future of AI technology.

“Moreover, the UK's world-class health and life sciences sector, alongside its financial prowess, presents strategic opportunities to responsibly leverage data for AI advancements. Recent discussions with the EU and India highlight the potential for the UK to strengthen its global partnerships, fostering collaborative technological progress. As we navigate these challenges, it is imperative that we create an environment that attracts and retains top talent, ensuring the UK remains at the forefront of AI innovation."