London has cemented its position as Europe’s top destination for digital tech investment after pulling in the lion’s share of UK foreign direct investment last year, according to the latest figures from EY’s 2025 UK Attractiveness Survey.
The capital attracted 96 Foreign Direct Investment (FDI) projects across the software and IT services sector in 2024, more than any of the 259 European regions assessed by EY, while the UK overall remained the leading European destination for tech FDI, attracting 161 digital technology projects.
However, despite holding onto the top spot, London saw a sharp drop in tech-related FDI last year, with project numbers falling 28% compared to 2023. Across the UK, digital tech investment also slumped, with the total number of FDI projects falling by 37% from a peak of 255.
According to EY, the downturn is reflective of a wider European slowdown, as tech FDI across the continent dropped 17%, from 954 projects in 2023 to 793 in 2024.
Tech-related inward investment to the UK has been in freefall over recent years. In 2019, the country secured 432 digital technology FDI projects, with the number falling in three out of the five intervening years by as much as 63%.
“Following a particularly strong 2023 for tech investment into the UK, a subsequent drop-off was expected,” said Rob Atkinson, EY UK&I managing partner for technology, media and telecoms.
“While the software and IT services sector has consistently led foreign direct investment in the UK over the past twelve years, we have witnessed a decline in tech FDI, particularly from the US, which has traditionally been a major source of investment.
“To counter this trend, it is crucial that we strengthen our eco-system to enhance our appeal to both domestic and international investors.”
Plans to Power the Next Industrial Revolution
The UK Government is already fully onboard with that sentiment, having only yesterday (10th June), announced that a raft of leading global tech firms are poised to make significant investments into the UK.
These investments will see some firms setting up shop in the UK for the very first time in the hope of powering breakthroughs in areas from AI to fintech, healthcare and clean energy, all central to Labour’s upcoming modern Industrial Strategy.
Among those making inroads are Liquidity, a US-based global AI fintech, which will launch its European HQ in London as part of a plan to invest an additional £1.5 billion into cutting-edge enterprises over the next 5 years, and InnovX AI, a European startup that will invest £14.7 million in a new London technology hub, creating 30 jobs.
Danish IT consultancy Netcompany will invest £2 million as it expands its Leeds office and launches a new site in Edinburgh, while Nebius, a Dutch AI infrastructure company, announced a long-term commitment to back the UK’s AI sector, starting with an initial investment of £200 million.
Using this foreign investment, the Government hopes to unlock the private sector and place the UK at the heart of what it sees as the next Industrial Revolution, with its Industrial Strategy tipped to provide a credible 10-year plan to deliver the stability global businesses need to invest in the country’s high-growth sectors.
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A significant number of the new investments are set to come from European firms, which could prove crucial to bolstering the UK against economic headwinds coming out of the US, which have already caused some upset.
EY’s study found that while the US has historically been the largest contributor to UK FDI, and the most important source of tech-related inward investment, there has been a consistent downward trend in American investments over recent years.
Between 2019 and 2024, US tech-related FDI fell by 60% for Europe as a whole, and by 80% for the UK, a trend which saw India overtake the US as the UK’s leading source of tech-related inward investment for the first time last year.
Announcing the investments, the science and technology secretary Peter Kyle said: “The era of hesitancy is over: we can be the masters of our fate, and through the measures I am announcing today, we will harness the vast potential of our trillion-pound tech sector to help remake our country for the better.
“The UK has all the tools needed for success in science and technology, and by working as an active partner to our world-leading universities and cutting-edge businesses, this Government will ensure that we seize the era-defining opportunities before us.”
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