North East FDI projects fall 48% to decade low
Foreign direct investment into the North East almost halved in 2025, with the region securing just 22 projects – although Newcastle retained its position as one of the UK’s leading regional destinations, ranking sixth among UK cities outside London for inward investment activity.
The figures have been published in EY’s latest UK Attractiveness Survey, which found the North East had one of the steepest declines in inward investment activity across the UK, vastly exceeding the national fall of 14%.
UK-wide FDI projects dropped from 853 to 730 and as a result, the North East’s share of UK FDI projects fell from 4.9% in 2024 to a decade-low of 3% in 2025.
The downturn was also reflected in employment outcomes: FDI-related job creation fell by 47% to 998 jobs, down from 1,864 in 2024.
The region ranked 11th in the UK for FDI-related employment and accounted for 3.5% of all UK jobs generated by inward investment projects, compared with 4.9% the previous year.
Despite the broader slowdown, Newcastle secured 11 FDI projects in 2025, marginally down from 13 the previous year.
Business and Professional Services was the North East’s strongest-performing sector in 2025, generating five projects. Finance, Software and IT Services, and Transportation Manufacturers and Suppliers were the next most active sectors, each attracting three projects.
Analysis by investment activity showed business services accounted for six projects, followed by manufacturing with five and logistics with three.
However, all three areas experienced significant declines compared with 2024: Business services-related projects fell by 54%, manufacturing activity dropped 58%, and logistics investment declined by 40%.
The region also saw a substantial reduction in its ability to attract fresh inward investment. The North East secured 10 new FDI projects in 2025, down 55% from 22 in 2024. As a result, its share of UK new investment projects fell from 4.1% to 2.1%.
The United States remained the North East’s largest source of foreign investment, accounting for 22.7% of projects in 2025. However, this was down from 31% the previous year, reflecting a broader decline in US-backed investment activity.
Over the last decade, Japan has been the region’s second-largest source of inward investment, accounting for 10.5% of projects. However, Japanese investment was limited to a single project in 2025, placing it joint sixth alongside Germany, India, and Italy.
It is hoped Japan’s investment in the North East will increase, following a visit by Mayor Kim McGuinness towards the end of 2025, which resulted in a pair of agreements signed between Hitachi and NEMSA, aimed at accelerating the region’s transition to low-carbon transport and cementing the Port of Tyne’s position as an emerging clean-energy hub.
Other countries among the leading sources of inward investment into the North East during 2025 included France, the Netherlands, Sweden and Canada.
The findings come against a backdrop of weaker investment activity across Europe, where FDI projects declined by 7% amid ongoing economic uncertainty, elevated energy costs and increasing competition from markets including the United States and Asia.
EY’s investor sentiment research suggests workforce availability remains the most important factor for businesses considering investment outside London, cited by 30% of respondents.
Access to regional grants and incentives and transport infrastructure were each identified by 27% of investors, while 26% highlighted the cost and availability of commercial property as a key consideration.
The survey also found that access to suppliers and business partners, alongside established industry clusters, remain important factors in attracting investment to regional economies.
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.
“However, the decline in FDI projects in the North East last year was more pronounced than in any other UK region, which emphasises the need for improvement.
“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.
“The regional gap between London and the rest of the UK has widened, so it’s crucial that the North East builds on its industrial strengths and heritage as well as capitalising on emerging opportunities around technology, Artificial Intelligence, and future talent to increase its competitiveness both nationally and globally.”
