UK’s FDI focus should be on investor retention and reinvestment, says Irwin Mitchell

Following this week’s ONS figures pointing to weaker momentum in net inward overseas investment, a leading expert in FDI has urged the UK government to double down on investor retention and reinvestment.

Bryan Bletso, Head of International at Irwin Mitchell, said: 

“These latest figures are disappointing but not too surprising. The UK can however strengthen inward investment by focusing on speed and certainty, supporting international businesses already here to scale up, while targeting new projects in priority sectors.”

The ONS estimates the UK’s inward foreign direct investment (FDI) position - the stock of overseas-owned investment in the UK - fell to £2,127.6bn at the end of 2024, down from £2,203.0bn a year earlier.

The data also shows a marked weakening in net inward FDI flows, with total net flows into the UK falling to £13.4bn in 2024, from £41.3bn in 2023.

While the UK’s total inward investment position declined, its largest sources of inward investment stock were broadly stable year-on-year. The EU inward position stood at £762.3bn at end 2024 (£763.5bn in 2023), while the United States was also steady at £640.3bn (£640.4bn a year earlier). 

By contrast, the flow picture was weaker, with EU net inward flows falling to £21.9bn in 2024 (£54.0bn in 2023), and US net inward flows more negative at –£25.0bn in 2024 versus –£18.1bn in 2023. China remained a small contributor, with an inward position of £2.5bn in 2024 and net inward flows of £0.276bn. 

Bryan Bletso added:

“The UK still has a very substantial base of overseas-owned investment, but we need to work harder to turn that base into repeat investment, especially in a world where investors are making decisions amid ongoing economic and geopolitical uncertainty.

The most practical route is to make the UK easier to invest in day to day, with predictable policy and faster delivery on planning, infrastructure connections and access to skills. That’s how you encourage firms to reinvest profits and choose the UK for their next expansion.

Alongside that, the UK should continue targeting high value projects in priority sectors, using a clear, consistent proposition that international investors can act on quickly.

While these figures reflect 2024, socio economic and geopolitical uncertainty has continued to weigh on investment decisions since then - making speed, clarity and stability even more important for investors.”

Irwin Mitchell produces a regular report analysing the key trends shaping foreign direct investment (FDI). Developed in partnership with leading UK economics consultancy Cebr, our new UK Attractiveness Index provides a comprehensive picture of the UK’s investment landscape.