Manchester retains top spot outside London for FDI
Manchester was Britain's best-performing city outside London for attracting Foreign Direct Investment (FDI) in 2025 despite a fall in the number of projects, new figures from EY have shown. The latest EY 2026 UK Attractiveness Survey, which ranked 259 European regions on the number of FDI projects they attracted last year, showed Manchester attracted 31 FDI projects in 2025 – down from 44 in 2024. That made it the best-performing city outside of London for FDI for the fourth time in the last six years.
Key sectors and regional performance
Key FDI sectors in Manchester included software and IT services, with six projects, with four projects in the health and social work sector and another four in finance, business and professional services. The UK saw a total of 730 FDI projects last year, down 14% on 853 in 2024. The North West was the fourth ranked region in the UK in terms of project numbers with 51, behind Greater London (279 projects), Scotland (108 projects) and the West Midlands (68 projects).
North West sees decline but jobs rise
Of the UK’s nations and regions, only Greater London, Wales and Northern Ireland saw year-on-year growth in FDI projects, with the South West flat. All other regions reported declines, with the North West seeing a 41% year-on-year fall. EY said that while the number of projects fell, the North West continued to attract high-value projects with employment from FDI projects rising from 2,755 to 3,161 jobs year-on-year. Key North West sectors included manufacturing, business services and sales and marketing.
US remains leading investor
The USA remained the leading backer of North West FDI projects, as it has been for the last decade, accounting for 15 projects out of 51. Other key sources of investment were India, France, Ireland and Japan. Germany has been the North West’s second-biggest driver of FDI over the last decade, but accounted for only one project in 2025.
Expert commentary on outlook
Hilary Heap, EY’s North Market Leader, said: “While the North West saw a year-on-year decline in FDI projects, this was in keeping with both the UK and Europe-wide trends, with a variety of economic headwinds including subdued growth and geopolitical uncertainty weighing on growth. However, there remain reasons for optimism.
“Manchester retained its position as the UK’s leading city for FDI outside London, which is testament to the city’s diverse business community and its significant potential. Manchester has also been open to significant redevelopment in recent years, standing the city in good stead as an investment hub. The technology sector – which forms part of the Government’s Industrial Strategy – continues to be a particular strength for the North West, having attracted more projects than any other sector in the region last year.
“Our latest survey highlights that global investors are prioritising access to a skilled workforce, connectivity and infrastructure, and access to regional grants and incentives when considering locations outside of London. The North West is well-positioned with a strong talent base and projects like Northern Powerhouse Rail strengthening its appeal. Looking ahead, policymakers have an opportunity to capitalise on these strengths by prioritising public and private sector collaboration and a clear focus on innovation to unlock more buoyant levels of FDI growth.”
Regional disparities and structural challenges
Peter Arnold, EY UK chief economist, said: “While London outperformed the broader European trend in 2025 and remains a highly attractive global investment hub, FDI activity across much of the UK was more subdued. No English region outside the capital recorded growth, and while Wales and Northern Ireland saw year-on-year increases, their overall totals remain significantly below the UK’s traditional investment hubs. This widening gap between London and the rest of the country risks reinforcing long-standing regional disparities.
“Against a backdrop of more cautious global investment flows, the UK must sharpen its focus on where it can compete most effectively and deliver long-term value. Addressing structural barriers - including high energy and labour costs - will be critical to better insulating the economy from ongoing uncertainty.
“Strengths in sectors such as technology, professional services and financial services remain a clear advantage, but this needs to be complemented by stronger performance in high-value, productivity-enhancing areas such as advanced manufacturing and life sciences. Strengthening regional investment propositions through improved connectivity, workforce capability and a stronger pipeline of investable projects will be essential to translating investor interest into sustained, nationwide growth.”
