FDI: UK regions among Europe’s top destinations for inward investment

• London leads Europe for attracting FDI and three other UK regions among the top 20 best performing European locations, out of 259 regions assessed
• Regions across North of England recorded a 29% year-on-year rise in FDI projects, driven by increase in manufacturing activity
• The UK recorded 853 FDI projects in 2024, making it Europe’s second-best performing country for attracting inward investment

London was the leading European destination for Foreign Direct Investment (FDI) last year while Scotland, the West Midlands and the North West were among the continent’s top 20 best performing regions for attracting inward investment projects.

The EY UK Attractiveness Survey 2025 ranked 259 regions across Europe according to the number of FDI projects each attracted in 2024. Greater London (265 projects) and Scotland (135 projects) maintained their positions as the UK’s first and second-best performing destinations for investment, with Scotland also ranked as the sixth best performing region in Europe.

The West Midlands and the North West were Europe’s joint fourteenth best performing region, attracting 86 projects each - a higher number of inward investment projects than Istanbul (82 projects) and Berlin (73 projects).

The UK recorded 853 FDI projects in 2024, a 13% decline from 2023, making it Europe’s second best performing country for attracting inward investment. France ranked first in Europe in 2024 with 1,025 projects, a decline of 14% year-on-year.

UK attractiveness set to be less impacted than rivals by global disruption

EY also assessed the effect of US tariff announcements on the UK’s attractiveness as an investment location. This was based on two surveys, formed of interviews with a panel of 400 international investment decision-makers between January and March 2025, as well as a panel of 300 in May 2025. The proportional split of investors from specific countries and sectors remained the same across both samples.

According to the survey conducted in May 2025, more than half (52%) of investors said they planned to invest in the UK over the next year. However, this was lower than the 62% response to the same question in the initial March 2025 survey, conducted before the announcement of US tariffs. Of those planning to invest in the next 12 months, 52% said they intend to invest in London and 37% intend to invest in the North of England. Thirty percent plan to invest in Scotland over the next year. 

While the findings revealed that the announcements of tariffs and worldwide trade disruption have affected investor appetite for FDI across various territories, there were signs that the UK’s attractiveness may be marginally less affected than some of its international competitors. When asked whether US tariffs have impacted their plans over the next year, 43% of respondents to May’s survey answered that the announcements had made them more likely to invest in the UK in the next 12 months, compared to 38% for the EU and 29% for the US. Forty eight percent said they were now less likely to invest in the UK, compared to 50% for the EU and 61% for the US. 

The findings also revealed that investors do not believe that current global economic disruption will significantly affect the UK’s attractiveness as an investment location in the coming years. More than half (54%) of respondents to May’s survey said they expect UK attractiveness to increase over the next three years, similar to the proportion (53%) that said the same in March’s survey. A quarter (26%) of respondents expect UK attractiveness to remain the same, while 17% expect it to decrease. 

Anna Anthony, EY UK & Ireland Regional Managing Partner, said: “It’s encouraging to see the UK feature prominently in Europe’s leading regions for foreign direct investment (FDI). However, while the UK’s regional FDI gap has narrowed, the distribution remains uneven across the country and, like Europe as a whole, the UK saw investment levels overall dip last year. To make a long term, sustainable impact, national policy will need to be coordinated closely alongside local strategies that play to distinct regional strengths to ensure a recovery in inward investment happens around the UK, rather than in a few concentrated areas. 

“While worldwide economic disruption will undoubtedly make some businesses hesitant to part with capital, investors appear to regard the UK as a marginally more attractive proposition than some of its closest competitors, perhaps helped by recent progress in trade negotiations and the relative stability of the political and regulatory environment. Nevertheless, recent months have shown how swiftly the global picture can change and there can be no room for complacency. A concerted effort to boost economic growth, bolster talent pipelines nationwide and deliver infrastructure will help the UK tap into its regional potential and attract high-value investment opportunities in the years ahead.”

North of England FDI rose in 2024 as most UK regions saw investment fall

According to the EY analysis, most UK regions attracted fewer FDI projects in 2024 than they had in 2023. Greater London (-26%), Scotland (-5%), the West Midlands (-32%), the South East (-9%), the South West (-32%), the East of England (-36%) and Northern Ireland (-6%) all saw project totals decline year-on-year. 

In contrast, regions across the North of England saw their combined FDI total in 2024 rise by over a quarter (29%) compared to 2023. The North West (86 projects) became the UK’s third best performing region for FDI, recording a 27% increase, while Yorkshire and the Humber (52 projects) and the North East (42 projects) saw projects rise by 53% and 11% respectively. 

The East Midlands (36 projects) and Wales (16 projects) were the only other two regions to attract a greater number of FDI projects in 2024 than they had in 2023.

Greater London accounted for 31% of all UK FDI projects in 2024, compared to 36% the year before. Cumulatively, regions across the North of England accounted for 21% all UK FDI projects attracted in 2024, which was an increase from the 14% share achieved in 2023. 

Peter Arnold, EY UK Chief Economist, said: “Following a particularly strong FDI performance for London and the West Midlands in 2023, a subsequent drop-off in 2024 was not unexpected. The capital remains the leading UK destination for investment, buoyed by unique advantages like availability of talent and access to the financial markets, while Scotland has now achieved second position for each of the last ten years. The West Midlands finds itself equal with the North West in third position and, while rankings will shift year-to-year, both regions have increased their overall share of UK FDI projects over the last decade.” 

UK cities: Manchester regains position as top city for FDI outside London

The UK’s most successful city for FDI outside of London in 2024 was Manchester, which overtook Birmingham to attract 44 inward investment projects in 2024 - a 22% increase on the year before. Manchester has been the UK’s leading city outside London in securing FDI projects in three of the past five years.

Glasgow followed Manchester in second place with 27 projects in 2024, a 12.5% increase on the year before. Glasgow became Scotland’s leading city for FDI for the first time in five years – a position that Edinburgh held between 2020 and 2023. 

Joint third place Birmingham and Edinburgh attracted 24 FDI projects each, representing a decline of 66% and 25% respectively from the previous year. 

London continues to dominate in the UK’s leading FDI sectors

Software and IT services was the UK’s leading sector for inward investment in 2024 with 161 projects secured nationwide. This was followed by transportation manufacturers and suppliers (75 projects), which includes automative and aerospace businesses, and business and professional services (74 projects). 

Despite Greater London’s overall annual decline in FDI projects, the capital continued to lead the UK across a variety of sectors, securing three in every five (60%) tech projects - more than half of all UK professional services and finance projects - and more than a quarter (27%) of all construction-related FDI. Greater London was also the leading UK region for FDI projects in the telecoms, leisure, and retail distribution sectors. 

The West Midlands was the leading region for transport manufacturers and supplies, securing a quarter (24%) of all UK projects in that sector. 

Scotland was the UK leader in oil and gas FDI, as well as inward investment in the utility supply, electronics, and the machinery and equipment sectors. 

Peter Arnold, EY UK Chief Economist, said: “Tech has been the consistent lead sector for UK FDI over the last twelve years, and London has continued to hoover up the lion’s share of digital projects. But the sector and activity mix outside London remains diverse, which could be an advantage for the UK in the years ahead. The prominence of manufacturing in the North West, logistics in the Midlands and R&D activity in the South East, alongside renewable energy opportunities in Scotland and the North East, means the UK has various hubs that could potentially lead Europe in the years ahead. 

“Policymakers will need to determine how best to support these regional strengths while also fuelling those sectors that investors see as the key driver for UK investment in future, such as professional services and technology. The upcoming Industrial Strategy should provide opportunities to coordinate a nationwide approach to bolster and protect high-value sectors and activity. For example, elevated energy costs may present challenges for the North’s ongoing recovery in manufacturing, and enhanced energy security could help mitigate some of the impact.”

Assessing FDI by activity

Examining FDI by activity also reveals that the rise in project totals across the North of England in 2024 was driven in part by an uplift in projects related to manufacturing – a type of inward investment traditionally prioritised as high-value and strategically important by policymakers.

The number of manufacturing projects rose to 25 for the North West (up from 11 in 2023), 24 for Yorkshire and the Humber (up from 9) and 12 for the North East (up from 10). Cumulatively the North of England more than doubled the amount of manufacturing-related FDI projects it attracted in 2024 compared to 2023. 

Greater London fared well in attracting other types of high-value FDI activity, achieving year-on-year growth of 72% in research and development investment projects and a 22% increase in initiatives related to the establishment of new company headquarters.

Investors favour support for key industries and infrastructure spending

The March survey also revealed the attributes of the UK that investors find most attractive. When asked which factors most important in motivating them to invest in the UK, the most popular answer was the liquidity of the financial markets and availability of capital in the UK. The second most popular choice was the UK’s legal and regulatory environment, while the strength of the UK’s domestic market came third.

Technology (39%) and professional services (34%) were seen by investors as the leading sectors that could be expected to drive UK growth over the next three years, followed by financial services (22%). 

When asked where the UK should concentrate its efforts to maintain its global competitiveness, a third (33%) of investors surveyed in May said the UK government should focus on supporting strategic industries such as cleantech and AI. A quarter (24%) said the UK should invest in major infrastructure projects, while a similar number (23%) said the UK needs to reduce energy prices and increase energy independence. One in five (20%) said the UK should reduce and simplify its tax policies. 

Survey respondents said that greatest risks to UK attractiveness over the next three years would be macroeconomic conditions such as slow growth and high interest rates (36%), tariffs and other trade barriers (33%) and geopolitical tension (32%). 

When asked which global cities they expect to be London’s biggest rivals for FDI over the next three years, more than half (57%) named New York, while 42% said Paris. Nearly a third (32%) named Dubai, while 30% said Dublin. 

EY also asked investors to name the most important factors they considered when deciding whether to invest in locations outside London. The highest number of responses included access to regional grants and incentives (37%), followed by availability and skills of the local workforce (30%), with availability of business partners and suppliers (28%) in third place. One in five (21%) said they considered the strength of local transport infrastructure.