The UK had the third-most introduced greenfield international direct funding (FDI) initiatives between January 2022 and September 2025, in response to a brand new report. Round two-thirds of introduced FDI initiatives throughout this era had been within the clear vitality and AI sectors.
The US got here first, adopted by India, which had the identical variety of introduced initiatives because the UK. Adjusted for inflation, flows into the UK throughout this practically four-year interval averaged $85bn (£63.29bn) a yr, a 40% enhance over pre-pandemic ranges, in response to the McKinsey report ‘Welcome to the UK: How can FDI assist reignite the nation’s progress’.
Megadeals – initiatives with a worth of $1bn or extra – had been additionally a serious function of introduced FDI initiatives. These will be defined by the excessive capital depth of the clear vitality and AI sectors, which drove flows. Lower than ten megadeals now account for round 40% of inward greenfield FDI within the UK.
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Within the vitality sector, the UK nonetheless faces a tough state of affairs, because it has the very best vitality costs within the OECD. The report means that the problem doesn’t simply lie in growing provide, as updating current networks to enhance storage, transmission and distribution infrastructure is critical to handle structural challenges.
Regardless of these obstacles, bulletins of greenfield FDI clear vitality initiatives have soared, rising 80% from a median of $21bn per yr between 2015 and 2019 to $37bn between 2022 and 2025. Whereas introduced FDI initiatives in fossil fuels have fallen by roughly 80%, initiatives in wind vitality have nearly doubled.
Regulatory and structural obstacles make executing these clear vitality initiatives a problem. Wind initiatives, which make up three-fifths of whole introduced FDI, face grid connection difficulties, excessive rates of interest, inflation spikes, labour shortages, planning delays and provide chain bottlenecks. The report notes that these components imply “the pipeline of introduced initiatives could also be at higher danger than in different sectors”.
The evaluation comes within the midst of a document wind energy public sale by the UK Authorities. German utility agency RWE secured 7GW of the 8.4GW secured within the sale. On 14 January, RWE introduced it will companion with US non-public fairness agency KKR to ship on the wind vitality initiatives.
By way of the digital financial system and AI, funding into the UK has boomed, matching world traits. Introduced initiatives in communications and software program have seen flows enhance by 60% since 2022, whereas information centre funding up to now three years has grown by 115% in comparison with the earlier interval.
The report means that the continuous progress of this trade is tied to the vitality sector, as it’s energy-intensive and would require extra grid capability. It additionally highlights some progress spots for the superior manufacturing sector. Whereas it makes up lower than 10% of the UK’s FDI inflows, initiatives within the electrical automobile and defence sectors recommend areas for growth.
The most important international buyers in the UK up to now three years had been the US and Europe, accounting for 80% of introduced initiatives. The report notes that, worldwide, the geopolitical distance between FDI companions has lowered. Whereas the UK’s funding companions had been already geopolitically related, this has narrowed even additional over the previous few years. It suggests tapping into different financial companions resembling superior economies in Asia and the Center East to diversify the nation’s FDI sources. Inflows from the previous have doubled since 2022.
Final summer time, the Division of Enterprise and Commerce launched a report revealing that FDI undertaking numbers within the UK reached a document low between 2024 and 2025. Just like the McKinsey report, it additionally famous that the worth of particular person offers had grown, largely pushed by investments within the digital financial system.
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