- UK secured 155 technology investment projects, the highest in Europe.
- London attracted more than twice as many projects as Paris.
- US investment in UK tech rebounded, while Indian-backed projects declined.
The UK remained Europe's leading destination for technology foreign direct investment (FDI) in 2025, although the number of projects landing in the country declined from the previous year, according to new research from EY.
The latest UK tech investment figures show the country secured 155 software and IT services projects last year, accounting for 18 per cent of all technology-related FDI projects across Europe. France followed with 104 projects, while Germany recorded 102.
London maintained its position as Europe's top city for technology investment, attracting 85 projects during the year. That was more than double the number secured by Paris, which ranked second. Over the past five years, London attracted 616 technology investment projects, also more than twice the total recorded by the French capital.
Despite retaining its lead, the UK saw technology-related inward investment fall by 4 per cent in 2025, while London experienced a steeper decline of 12 per cent.
The wider European market moved in the opposite direction. Software and IT services projects across Europe rose by 8 per cent to 857, although activity remained below the pre-pandemic peak of 1,462 projects recorded in 2019.
The report suggests that while the UK continues to attract international technology investors, competition for global investment is intensifying as countries seek to position themselves as hubs for artificial intelligence, digital services and emerging technologies.
Beyond London
The research also highlighted growing technology investment activity outside the capital. Cities including Manchester and Edinburgh recorded technology as their largest source of foreign direct investment, suggesting investors are increasingly looking beyond London.
Investor sentiment remained broadly positive towards the UK. Among 360 international investment decision-makers surveyed, 57 per cent said the UK outperformed competing markets in the availability of technology talent, including engineers and data scientists. A further 32 per cent said the UK was on par with rival countries.
More than half of respondents also rated the UK ahead of competitors for its start-up ecosystem and research institutions, while 59 per cent highlighted the country's data protection framework as a strength.
Artificial intelligence emerged as another area of confidence. Nearly half of investors said the UK offered a more attractive environment for AI investment, development and deployment than competing markets, while 39 per cent viewed it as broadly comparable.
US returns to the top
The source of investment shifted during the year, with the US reclaiming its position as the largest contributor to UK technology projects.
US-backed technology investments increased by 21 per cent, rising from 33 projects in 2024 to 40 in 2025. While that marked a recovery after several years of decline, activity remained below levels seen before the pandemic.
India moved in the opposite direction. The number of Indian-backed technology investment projects fell by 40 per cent to 24, after India emerged as the UK's leading source of technology FDI in 2024.
Roy Cornik, technology lead at EY UK, reportedly said London's position continued to be supported by a skilled workforce, access to finance and a strong ecosystem of technology companies. However, he noted that falling investment levels and increasing competition for capital meant the UK would need to continue investing in skills, infrastructure and innovation to maintain its advantage.
The report also found that investors want to see improvements in digital skills, stronger infrastructure such as data centres and 5G networks, and greater support for emerging technologies including artificial intelligence and quantum computing.
