Political instability in the UK is one of the top concerns cited by foreign investors, according to a report showing overseas investment projects in Britain fell last year.
EY’s latest UK Attractiveness Survey showed UK foreign direct investment projects dropped 14% in 2025, with Greater London the only English region to see growth as the regional investment gap widens.
The report, which also includes an investor sentiment survey, showed overseas investor worries over key issues, which may be holding back their spend on projects across the UK.
Political instability was flagged in the poll as the second biggest disadvantage for the UK as an investment destination, behind energy costs.
It comes as Britain is heading for its seventh prime minister in 10 years after Sir Keir Starmer announced his resignation on Monday, with aims for a new leader to be in position when Parliament returns from its summer recess on September 1.
UK government bonds – through which overseas investors buy into Britain – have been under pressure since the start of the year, with prices falling as yields rise on the back of downgrades for the UK economic growth outlook and amid political uncertainty.
EY said its report also showed foreign investor concerns over labour market costs and tax competitiveness.
But the figures showed despite the UK’s overall decline in foreign direct investment projects, this was the second highest in Europe last year, with 730 projects recorded, beaten only by France with 852.
And more than half of global investors surveyed said they expect the UK to become more attractive to invest in over the next three years.
Its investor sentiment survey saw 360 international investment decision-makers polled in March and April.
Anna Anthony, EY UK & Ireland regional managing partner, said: “Despite an overall decline in FDI project numbers amid a challenging economic and geopolitical backdrop, investor sentiment suggests the UK – particularly London – remains a strong contender in a highly competitive global market.
“While the UK is well positioned to attract long-term capital and compete with leading destinations such as the US and France, the priority now is to convert this into sustained investment that drives growth, supports innovation and strengthens economic momentum across all regions.”
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