London tops Europe for tech investment as UK leads digital FDI

• The UK attracted 155 tech FDI projects in 2025, outpacing France and Germany.
• London secured 85 tech projects, more than double Paris over five years.
• Investors highlight UK’s strong skills, capital, and AI investment appeal.

The UK retained its position as Europe’s leading destination for software and IT services inward investment in 2025, with London once again ranked the continent’s leading region for tech FDI projects, according to EY’s 2026 UK Attractiveness Survey.

The UK secured 155 FDI projects in the software and IT services sector last year, maintaining its lead ahead of France (104 projects) and Germany (102 projects). The UK secured around one in every five (18%) technology-related FDI projects in Europe last year. 

London remained Europe’s top city for attracting tech investment, securing 85 projects in 2025 - more than twice the number recorded by second‑ranked Paris. This performance reinforces London’s long‑running dominance as Europe’s leading tech investment hub; over the past five years, the capital has attracted 616 tech‑related FDI projects, more than double the total secured by Paris over the same period.

Despite the UK and London maintaining a clear lead, technology‑related project volumes declined in 2025, falling by 4% nationally and by 12% in the capital compared with 2024 levels. 

By contrast, Europe as a whole secured 857 software and IT services investment projects last year, an increase of 8% year on year. However, this remains below the decade peak seen in 2019, when 1,462 software and IT services projects were recorded across the continent. 

Peter Arnold, EY UK Chief Economist, said: “While inward investment levels softened globally and across Europe last year amid trade disruption and geopolitical uncertainty, technology remained a reliable and leading source of FDI for the UK. London’s success as Europe’s leading hub for software investment is clear, but tech’s contribution to the UK economy extends well beyond the capital. Technology is the leading source of FDI into major cities such as Manchester and Edinburgh, reflecting the UK’s deep and widely distributed pool of skilled technology talent.”

Investors optimistic about UK’s AI competitiveness 

EY’s investor sentiment survey, which forms part of the UK Attractiveness Survey, is based on interviews with a panel of 360 international investment decisionmakers based around the world. The findings reflect confidence in the UK’s digital competitiveness across key enablers of technology and AI growth.  

More than half of investors (57%) said the UK outperforms competitor markets in the availability of technology talent, including data scientists and engineers, while 32% said it performs at a comparable level. Investors also rated the UK ahead of competitors for the strength of its technology start‑up ecosystem and research institutions (53%), and for its approach to data protection regulation (59%).

This confidence extends to AI specifically, with nearly half of investors (48%) believing the UK offers a more attractive environment for AI investment, development and deployment than rival markets, while 39% see it as broadly comparable.

When asked what drove their companies to choose the UK as a location for AI research, development and deployment, the availability of skilled AI professionals was the most popular answer. This was followed by the availability of investment capital for AI start‑ups and scale‑ups, and the strength of the UK’s academic and research ecosystem.

When asked which steps the UK should take to improve its digital competitiveness, investors recommended reinforcing its talent advantage. Improving data and technology skills across the workforce was cited by 39% of respondents, alongside increased investment in technology infrastructure such as data centres and 5G connectivity (36%), and greater support for innovation in emerging technologies including AI and quantum (33%). 

Roy Cornick, EY UK&I Technology Lead, said: “London’s continued dominance as Europe’s leading destination for technology investment is underpinned by a highly skilled workforce, a mature and well-connected ecosystem of global tech companies and scale-ups, and strong access to financing. While the Capital remains a critical asset to the UK’s tech ambitions, investor sentiment also points to confidence in the broader UK proposition, with the UK viewed as one of the most attractive markets globally for AI investment and deployment.

“Despite the UK’s continued leadership, technology‑related FDI declined nationally last year and investment across Europe remains below pre-pandemic levels. As competition for capital intensifies and investors become more selective, the UK must continue to reinforce its competitive advantages. Building on our skills base, improving access to scale‑up capital, investing in digital infrastructure and supporting the growth of regional tech ecosystems will be essential to converting strong foundations into sustained, long‑term growth, particularly as new opportunities in AI and quantum technologies emerge.”

US investment rebounds as global dynamics shift

Following several years of decline, US investment into the UK software and IT services sector showed signs of recovery in 2025. 

The number of US-originated projects increased by 21%, rising from 33 projects in 2024 to 40 in 2025, re-establishing the United States as the UK’s leading source of tech investment. Despite this rebound, US investment levels remain significantly below their 2019 peak, reflecting longer-term shifts in global capital flows.

India, which had been the UK’s leading source of tech FDI in 2024, saw a sharp decline in 2025, with project numbers falling by 40% to 24 projects.