The UK is among the world’s top three destinations for announced foreign direct investment (FDI) with around $85bn a year invested between January 2022 to September 2025.

A McKinsey and Co report, which has revealed the figures, notes that the UK’s green policies and AI being major drivers.

Energy, specifically clean energy, and communications and software, namely AI infrastructure, together accounted for about two-thirds of announced greenfield inflows into the UK, or around 45 per cent in energy and 20 per cent in communications and software.

As a result, there has been a surge in announced “megadeals” valued at more than $1bn each. Fewer than ten megadeals per year now account for about 40 per cent of the total value of inward greenfield FDI, which is nearly double their share in 2015–19. These large-scale projects have driven around 40 per cent of the increase in energy-related FDI and almost all of the growth in communications and software. Megadeals now represent around 50 and 60 per cent of total announced inflows in these sectors, respectively.

However, the report highlights that the UK continues to face significant energy-related challenges. In 2024, it had the highest industrial electricity prices in the OECD, which is weighing on competitiveness. Prices were around 40 to 50 per cent higher than in France and Germany, and four times higher than in Canada.

A range of levers could tackle the challenges, upgrading the UK energy system (boosting not only supply but also the required storage, transmission, and distribution infrastructure) could contribute to lowering costs in the United Kingdom while also supporting European energy markets as electricity interconnectors are built.

Meanwhile, announced FDI in fossil fuels in the UK fell by around 80 per cent, greater than the global decline of around 30 per cent. Investor sentiment may have been shaped in part by policy uncertainty and changes in the fiscal environment in recent years, including the introduction of the Energy Profits Levy in May 2022, a temporary additional tax on profits from oil and gas production in the UK North Sea.

---