UK popularity among foreign direct investors lowest since pandemic

The UK is the least engaging it has been to foreign investors since 2020, having fallen to sixth in Kearney’s annual rating of the market. Japan takes its former place, as investors cite industrial coverage uncertainty as a key deterrent.

A foreign direct funding (FDI) is an funding within the type of a controlling possession in a enterprise, in actual property or in productive belongings corresponding to factories in a single nation by an entity based mostly overseas. The cumulative worth of FDIs world wide had fallen steeply within the years earlier than the pandemic – crashing to a decade-long low in 2018 – however has been rebounding quickly since. In 2021, the extent of FDIs had already elevated to greater than $2 trillion, for the primary time since 2016.

The UK has among the main beneficiaries of that rallying market. For the earlier 5 years, analysis from technique consultancy Kearney discovered that the UK was within the prime 5 most engaging vacation spot for FDI on the earth – hitting a excessive of third in 2025, behind the US and Canada. Nonetheless, amid rising uncertainty across the nation’s political and social route – in addition to a stagnant financial image that continues to see the nation’s markets endure sluggish progress – it seems to be falling from favour.

Supply: 2026 Kearney Foreign Direct Funding Confidence Index

In keeping with Kearney’s 2026 FDI Confidence Index, the UK has tumbled to its lowest rating since 2020 – from third to sixth. Japan has taken its former place, as investors cite industrial coverage uncertainty as a key deterrent.

Keir Starmer’s Labour Get together received a landslide victory on the polls in 2024, having largely prevented key commitments on a lot of something, largely on the hope the outgoing Conservative administration would proceed to alienate voters. However having arrived in energy, and continued to keep away from cast-iron commitments in authorities, 79% of investors informed Kearney that frequent modifications in industrial coverage had elevated uncertainty for his or her funding planning.

Supply: 2026 Kearney Foreign Direct Funding Confidence Index

And whereas total, 88% of investors globally plan to extend their FDI charges within the coming three years, the UK might miss out on that entrance. When requested for causes to put money into the UK, 36% of respondents mentioned expertise innovation – and 31% recognized financial efficiency. However compared to the significance positioned on coverage stability by investors, these are low charges of favourability.

Jim Pearce, managing companion for the UK and Northern and Jap Europe at Kearney, mentioned, “It is a rating the UK needs to be taking critically. The competitors for FDI is intensifying as investors are wanting extra broadly, with rising curiosity in Asia and rising markets mirrored in our survey outcomes. Whereas tech and innovation capabilities stay a real power for the UK market, there are alternatives to enhance efficiency in different areas that investors in our survey say they worth most extremely, together with the effectivity of authorized and regulatory processes alongside the benefit of doing enterprise.”