Foreign direct investment (FDI) into the North East has fallen to its lowest level in a decade, with just 22 inward investment projects recorded in 2025, a 48% year-on-year decline, according to the latest EY UK Attractiveness Survey.
Regional share of UK FDI falls to 3%
The North East's share of total UK FDI projects dropped from 4.9% in 2024 to 3% in 2025, also a 10-year low. The region ranked 11th in the UK for FDI-related employment, with 998 jobs created, down 47% from 1,864 in 2024.
Business and professional services led the region with five projects, followed by finance, software and IT services, and transportation manufacturers and suppliers, each with three projects.
Newcastle retains sixth place among UK cities
Newcastle secured 11 FDI projects in 2025, maintaining its position as the UK's sixth best-performing city outside London, despite a slight drop from 13 projects in 2024. The city's performance was in line with the previous year's ranking.
Most UK regions saw FDI projects decline year-on-year in 2025, with only Greater London (5%), Wales (56%) and Northern Ireland (65%) recording increases. The South West saw no change, while all other regions experienced a fall.
New projects fall sharply
The number of new FDI projects in the North East fell 55% to 10 in 2025, down from 22 in 2024. The region's share of UK new projects decreased to 2.1% from 4.1% the previous year. Six projects were in business services, five in manufacturing, and three in logistics.
Despite the decline, EY directors expressed cautious optimism. Michael Scoular, EY Newcastle office managing partner, said: “There remain reasons for optimism in the North East, including the fact that Newcastle has retained its position among the top 10 UK cities for attracting inward investment, and that the region was still able to secure several high-value projects creating more than 100 jobs each in 2025.”
Warning over London-region gap
Scoular warned that the decline in the North East was more pronounced than in any other UK region, emphasising the need for improvement. He added: “There is undoubtedly a need for resilience and innovation in boosting the North East’s attractiveness as a destination for foreign investment. EY’s investor sentiment survey highlighted access to skilled workforces, robust local transport and infrastructure and access to regional grants and incentives as top priorities for global investors when considering locations outside of London – which should all be key considerations for the region going forward.”
Scoular stressed that the regional gap between London and the rest of the UK has widened, making it crucial for the North East to build on its industrial strengths and heritage while capitalising on emerging opportunities around technology, artificial intelligence and future talent to increase its competitiveness both nationally and globally.
