Foreign Direct Investment (FDI) has long been a cornerstone of the UK’s economic growth, fuelling innovation, creating jobs and anchoring global companies in our regions. Yet the latest government figures paint a stark picture: the number of FDI projects into the UK fell 17% in 2024/25 to 1,375, down from 1,654 just two years earlier. New investments – excluding expansions and mergers – dropped even more sharply, by 22%, from 1,048 to 815.
The human cost is equally sobering. In 2024/25, FDI created 70,000 jobs — 10,000 fewer than the year before. These are not just statistics; they represent missed opportunities for communities across the UK, from advanced manufacturing hubs in the Midlands to life sciences clusters in the South East.
Signals of a waning investment climate
This decline is not happening in isolation. The resignation of Poppy Gustafsson as Investment Minister earlier this year sent an unsettling signal about the government’s commitment to the investment agenda. At the same time, global players such as Merck and AstraZeneca have scaled back their UK investment plans, citing regulatory uncertainty and competitive disadvantages compared to other markets.
These developments reinforce what many in the business community have been warning: the UK’s reputation as a prime destination for overseas capital is eroding, and without decisive action, the slide will accelerate.
A proposal for accountability and focus
To reverse this trend, I am calling for the introduction of an Annual FDI Report to Parliament – a formal, transparent mechanism for setting strategy, tracking progress, and identifying risks.
This report should:
- Set clear strategic goals for attracting and retaining FDI, aligned with the UK’s industrial strategy and regional growth priorities.
- Define measurable targets — for example, the number of new projects, sectoral diversification, and job creation benchmarks.
- Report on progress against these targets, with year‑on‑year comparisons and explanations for any shortfalls.
- Identify risks to the investment pipeline, whether from policy changes, geopolitical shifts, or competitive moves by other nations.
- Outline corrective actions the government will take to address under-performance.
By presenting this report annually, the government would create a culture of accountability. Ministers would be measured not on rhetoric but on results, and Parliament – along with the public – would have the data needed to hold them to account.
Learning from the US playbook
The US offers a compelling example of what proactive investment policy can achieve. In recent years, the US government has taken a highly visible, coordinated approach to securing overseas investment, from targeted incentives to high‑profile trade missions. Federal and state agencies work in lockstep to court investors, often with senior political figures personally involved in negotiations.
This is not just about marketing; it is about signalling seriousness. When investors see a government willing to compete for their business, they respond. The UK must show the same drive — and an annual foreign direct investment report would be a powerful tool to focus that effort.
The zero‑sum reality of global investment
Inward investment is, in many cases, a zero‑sum game. A decision to locate a factory, research centre or logistics hub in one country means it will not be located in another. The competition is fierce, and the stakes are high.
If the UK is to win its share of these projects, it must offer a compelling proposition: competitive tax and regulatory frameworks, world‑class infrastructure, a skilled workforce, and a stable policy environment. But just as importantly, it must demonstrate to investors that it is actively in the game – not passively waiting for opportunities to arrive.
Rebuilding the UK’s investment reputation
The Department for Business and Trade’s own data shows its role in attracting investment is diminishing, with the number of projects it supported falling 29% in the last three years. This trend must be reversed.
A laissez‑faire approach to foreign direct investment is no longer viable. The UK needs a coordinated, well‑resourced strategy that brings together government departments, devolved administrations, local authorities, and the private sector. The annual FDI report would serve as the anchor for this strategy, ensuring that all stakeholders are aligned and accountable.
Conclusion: a call to action
The UK stands at a crossroads. We can continue on the current path, watching our share of global investment shrink, or we can take bold, measurable steps to reclaim our position as one of the world’s most attractive destinations for capital.
An annual FDI report to Parliament is not a silver bullet, but it is a critical first step. It would focus minds, sharpen strategies and send a clear message to the world: the UK is serious about investment, serious about growth, and serious about competing on the global stage.
The time to act is now – before more opportunities, and more jobs, slip away.
The recent announcement of a record £150bn commitment by US tech firms to build AI infrastructure and data centres in the UK is, on the face of it, a welcome boost to our technology ecosystem and a sign of confidence in Britain’s potential as an AI leader.
Yet alongside the headlines, there are important questions that must be addressed. Chief among them is security oversight: will the UK government have the ability to monitor and control the data content flowing through these facilities, particularly where it may have national security implications?
Equally pressing is the issue of tax fairness. Many of the same global tech giants have historically paid relatively little UK corporation tax, with profits often booked in other jurisdictions. Without reform to ensure that such large‑scale inward investment translates into proportionate tax receipts, the economic benefits risk being uneven – with infrastructure and jobs onshore, but a significant share of the profits, and therefore public revenue, remaining offshore.
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