London, UK – The United Kingdom has climbed the global rankings as a top destination for foreign direct investment (FDI), driven largely by booming sectors such as artificial intelligence (AI) and clean energy, according to a new report from consultancy McKinsey & Company.

Between 2022 and 2025, the UK became the third-largest destination for newly announced FDI projects worldwide, trailing only the United States and India. This marks a significant improvement from the 2015–2019 period, when the UK ranked fourth globally.

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Record-Breaking FDI Inflows

McKinsey’s analysis highlighted that the UK’s inflation-adjusted FDI inflows averaged approximately $85 billion per year, representing a 40% increase compared with pre-pandemic levels. This growth outpaces the global rise in announced FDI, which increased by around 20% over the same period.

By comparison, France and Germany attracted $45 billion and $43 billion annually, respectively, underlining the UK’s growing competitiveness as an investment hub in Europe.

The UK government has actively sought to boost foreign investment as part of broader efforts to improve the country’s productivity, innovation, and long-term economic growth.

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AI and Clean Energy Drive Investment

According to McKinsey, the bulk of the UK’s new FDI projects are concentrated in high-value, future-oriented industries, particularly:

• Artificial Intelligence (AI): Investments exceeding $1 billion in AI-driven technology, including machine learning, natural language processing, and enterprise AI platforms
• Clean Energy: Major renewable energy projects, including offshore wind, solar, hydrogen, and battery storage initiatives

By contrast, advanced manufacturing sectors such as battery production for electric vehicles and semiconductor fabrication received relatively little FDI, highlighting a gap in the UK’s industrial investment landscape.

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Geographic Patterns and Risks

The report found that roughly 80% of announced FDI into the UK came from Europe and the United States, leaving the country at risk of missing opportunities from emerging investment sources, including:

• Gulf countries
• South Korea
• Taiwan
• Other Asian and Middle Eastern markets

McKinsey warned that diversifying the sources of FDI will be crucial for the UK to maintain its position in the global investment landscape.

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Decline in Fossil Fuel Investments

FDI into the UK’s fossil fuel sector has fallen sharply, dropping by around 80% over the latest reporting period. By contrast, the global decline in fossil fuel investment averaged approximately 30%.

This steep reduction may reflect:

• Higher taxes on oil and gas companies in the UK
• Increased investor focus on sustainable and green energy projects
• The broader global trend toward energy transition and decarbonization

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Implications for UK Economic Growth

The McKinsey report underscores the importance of FDI in boosting UK productivity and economic growth. By attracting strategic investments in AI, clean energy, and other high-tech sectors, the UK can position itself as a global leader in innovation, even as traditional manufacturing investment lags behind.

Government officials have emphasized the need to attract more diverse sources of capital while continuing to create an enabling environment for AI, renewable energy, and technology-driven industries.

“The UK’s rising FDI ranking reflects strong investor confidence in the country’s technology and clean energy sectors. However, more targeted policies are needed to attract investment in advanced manufacturing and other emerging industries,” McKinsey said.

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Key Takeaways

• Global FDI Ranking: UK third-largest destination (2022–2025), up from fourth in 2015–2019
• Annual FDI Inflows: Approximately $85 billion, 40% above pre-pandemic levels
• Top Investment Sectors: Artificial intelligence, clean energy (over $1 billion deals)
• Geographic Sources: Predominantly Europe and the US; opportunity to diversify into Gulf, South Korea, and Taiwan
• Fossil Fuel Investment: Fell by ~80%, exceeding the global decline of ~30%

With a strong focus on AI, renewable energy, and technology-driven innovation, the UK is emerging as a global hub for high-value foreign investment, although challenges remain in attracting advanced manufacturing and diversifying sources of capital.