The UK remained Europe's leading destination for technology-related foreign direct investment in 2025, while London held its place as the continent's top city for tech investment.
EY's latest attractiveness survey found the UK secured 155 software and IT services projects, ahead of France with 104 and Germany with 102. That gave the UK 18% of Europe's technology-related FDI projects last year. London attracted 85 projects, more than twice the number in second-placed Paris.
Over five years, London's lead was wider still. The capital drew 616 tech-related FDI projects, more than double Paris's total over the same period.
Even so, project volumes weakened. Technology-related inward investment fell 4% across the UK and 12% in London compared with 2024.
Across Europe, the trend went the other way. The continent recorded 857 software and IT services projects, up 8% year on year, although still below the 2019 peak of 1,462.
Regional spread
The survey also pointed to a broader spread of technology investment beyond the capital. In cities including Manchester and Edinburgh, technology was the largest source of foreign direct investment.
"While inward investment levels softened globally and across Europe last year amid trade disruption and geopolitical uncertainty, technology remained a reliable and leading source of FDI for the UK. London's success as Europe's leading hub for software investment is clear, but tech's contribution to the UK economy extends well beyond the capital. Technology is the leading source of FDI into major cities such as Manchester and Edinburgh, reflecting the UK's deep and widely distributed pool of skilled technology talent," said Peter Arnold, Chief Economist at EY UK.
The investor sentiment section of the survey was based on interviews with 360 international investment decision-makers. It suggested overseas investors still see the UK as competitive on several measures linked to digital industries and artificial intelligence.
More than half, 57%, said the UK outperformed rival markets in the availability of technology talent, including data scientists and engineers. Another 32% said the UK performed at a comparable level.
Investors also rated the UK ahead of competitors for the strength of its start-up ecosystem and research institutions, cited by 53% of respondents. A larger share, 59%, said the UK was ahead on data protection regulation.
On artificial intelligence, 48% said the UK offered a more attractive environment for investment, development and deployment than rival markets, while 39% viewed it as broadly comparable. Asked what drove companies to choose the UK for AI work, respondents most often cited the supply of skilled professionals, followed by access to investment capital and the strength of academic research.
Policy pressure
Investors also highlighted areas where the UK could strengthen its position. Improving data and technology skills across the workforce was cited by 39% of respondents, while 36% called for greater investment in infrastructure such as data centres and 5G connectivity. A further 33% pointed to the need for stronger support for innovation in emerging fields including AI and quantum technologies.
"London's continued dominance as Europe's leading destination for technology investment is underpinned by a highly skilled workforce, a mature and well-connected ecosystem of global tech companies and scale-ups, and strong access to financing. While the capital remains a critical asset to the UK's tech ambitions, investor sentiment also points to confidence in the broader UK proposition, with the UK viewed as one of the most attractive markets globally for AI investment and deployment," said Roy Cornik, Technology Lead at EY UK.
"Despite the UK's continued leadership, technology-related FDI declined nationally last year and investment across Europe remains below pre-pandemic levels. As competition for capital intensifies and investors become more selective, the UK must continue to reinforce its competitive advantages. Building on our skills base, improving access to scale-up capital, investing in digital infrastructure and supporting the growth of regional tech ecosystems will be essential to converting strong foundations into sustained, long-term growth, particularly as new opportunities in AI and quantum technologies emerge."
US rebounds
The origin of investment also shifted during the year. US-backed projects in the UK software and IT services sector rose 21%, from 33 in 2024 to 40 in 2025, returning the United States to the top position as the UK's largest source of technology investment.
That recovery followed several years of decline, although US investment remained well below its 2019 high. India, the leading source of UK tech FDI in 2024, moved the other way as project numbers fell 40% to 24.
The contrast underlined a market still adjusting to broader changes in global investment flows, even as the UK and London retained their lead in Europe.