The UK is the least attractive it has been to foreign investors since 2020, having fallen to sixth in Kearney’s annual ranking of the market. Japan takes its former place, as investors cite industrial policy uncertainty as a key deterrent.
A foreign direct investment (FDI) is an investment in the form of a controlling ownership in a business, in real estate or in productive assets such as factories in one country by an entity based in another country. The cumulative value of FDIs around the world had fallen steeply in the years before the pandemic – crashing to a decade-long low in 2018 – but has been rebounding rapidly since. In 2021, the level of FDIs had already increased to more than $2 trillion, for the first time since 2016.
The UK has among the leading beneficiaries of that rallying market. For the previous five years, research from strategy consultancy Kearney found that the UK was in the top five most attractive destination for FDI in the world – hitting a high of third in 2025, behind the US and Canada. However, amid rising uncertainty around the country’s political and social direction – as well as a stagnant economic picture that continues to see the nation’s markets endure slow growth – it appears to be falling from favour.
Source: 2026 Kearney Foreign Direct Investment Confidence Index
According to Kearney’s 2026 FDI Confidence Index, the UK has tumbled to its lowest ranking since 2020 – from third to sixth. Japan has taken its former place, as investors cite industrial policy uncertainty as a key deterrent.
Keir Starmer’s Labour Party won a landslide victory at the polls in 2024, having largely avoided key commitments on much of anything, largely on the hope the outgoing Conservative administration would continue to alienate voters. But having arrived in power, and continued to avoid cast-iron commitments in government, 79% of investors told Kearney that frequent changes in industrial policy had increased uncertainty for their investment planning.
Source: 2026 Kearney Foreign Direct Investment Confidence Index
And while overall, 88% of investors globally plan to increase their FDI rates in the coming three years, the UK may miss out on that front. When asked for reasons to invest in the UK, 36% of respondents said technology innovation – and 31% identified economic performance. But in comparison to the importance placed on policy stability by investors, those are low rates of favourability.
Jim Pearce, managing partner for the UK and Northern and Eastern Europe at Kearney, said, “This is a ranking the UK should be taking seriously. The competition for FDI is intensifying as investors are looking more broadly, with growing interest in Asia and emerging markets reflected in our survey results. While tech and innovation capabilities remain a genuine strength for the UK market, there are opportunities to improve performance in other areas that investors in our survey say they value most highly, including the efficiency of legal and regulatory processes alongside the ease of doing business.”
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