Foreign direct investment (FDI) projects landing in the UK fell by 26 per cent year-on-year to 1,020 in the 2025/26 financial year, according to new figures from the Department for Business and Trade.

The total represents the lowest volume of inward investment in over a decade and a 54 per cent contraction compared with 10 years ago. The steep decline has raised fresh questions over the UK's international competitiveness and its capacity to deliver its long-term Industrial Strategy.

The downturn has severely impacted sectors that underpin the economy across the North of England, including the advanced engineering and renewable energy corridors across Yorkshire, the Humber, and the North East. Sector-specific contractions across the UK include:

Advanced engineering and supply chain: down 41%
Financial services: down 36%
Renewable energy: down 25%
Software and computer services: down 23%
Environment, infrastructure and transportation: down 22%
Life sciences: down 16%
Creative and media: down 15%

Despite the drop in project numbers, FDI-related employment showed resilience. New jobs created fell by just 0.3 per cent to 69,166, while safeguarded jobs rose 61 per cent to 16,407, driven by large individual commitments in infrastructure and energy.This indicates that while fewer individual mid-market expansions are occurring, large-scale capital investments remain substantial.

Commenting on the figures, Dr Joe Marshall, Chief Executive of the National Centre for Universities and Business (NCUB), said: “The scale of this decline is deeply concerning. A 26% drop in just one year, alongside a 54% fall over the past decade, suggests not a temporary slowdown but a sustained weakening in the UK’s investment appeal.

“While headline job numbers have remained broadly stable, this should not offer false reassurance. Fewer projects mean a smaller and more vulnerable pipeline of investors, and the sharpest declines are happening in sectors critical to future growth.

“A 41% fall in advanced engineering, 16% in life sciences, and 13% in R&D investment cannot be offset by a handful of big-ticket deals. These industries underpin long-term competitiveness, innovation and economic resilience. The next Prime Minister must move quickly to deliver an Industrial Strategy that gives globally mobile investors the certainty and confidence they need to choose the UK.”