FDI in the doldrums – time for the Single Market

Foreign direct investment (FDI) into the North East, on which the region (including Tees Valley) has depended so heavily for its economic development for decades, was at the bottom of the national league table by a big margin last year in terms of both projects attracted and jobs created and safeguarded.

The region attracted 23 FDI projects in 2025-26 creating 951 jobs out of a UK total of 1,020 projects creating 69,166 jobs, according to official statistics published this week by the Department for Business and Trade (DBT).

London attracted the lion’s share of FDI projects, with 326, and new jobs, with 14,261, followed well behind by the North West.

Number of FDI projects and the jobs created through them in 2025 to 2026, by region

Note: 44 multiple location projects associated with 23,816 new jobs are not included.

Source: Department for Business and Trade.

Nationally, the number of FDI projects has been falling for four years from 1,654 in 2022-23, a decrease of 38%. Between 2024-25 and 2025-26 it decreased by 25%.

Source: Department for Business and Trade.

The number of UK jobs created fell by 18% from 84,759 in 2021-22 to 69,166 last year. However, in the short term the number of new jobs decreased by only 0.3% between 2024-25 and 2025-26 and the number safeguarded has more than doubled from 7,765 since 2021-22.

Source: Department for Business and Trade.

Digital and technologies was the sector (as defined by the UK modern industrial strategy) with most new FDI projects in the UK last year, with 264, while environment, infrastructure and transportation had the highest number of jobs – 18,922.  Defence, a hot topic at the moment, saw 20 projects and 1,401 jobs (these sectoral breakdowns are official statistics in development). Software and computer services was the sector (as separately defined by the DBT) with the greatest numbers of FDI projects and jobs, with 197 and 14,575 respectively.

The continuing importance of the EU

The main source of FDI into the UK last year was the United States, accounting for 239 projects and 15,796 jobs, followed by India with 93 projects and 12,687 jobs. But even nine years after Brexit, they were still outnumbered by EU countries, which filled the next seven places accounting for 321 projects and 17.043 jobs between them.

Pre-Brexit record-breaking

Back in 2014-15, the year before the Brexit referendum, the government’s inward investment report was upbeat, to say the least. The minister at the time, Francis Maude, wrote: “During 2014-15 UKTI (UK Trade and Investment) recorded a total of 1,988 projects – 12% more than in the previous record-breaking year…Preliminary estimates from the OECD are that the UK has achieved a 50% increase in FDI flows in a year when the global value of FDI flows fell by 11%.”

Not only was the number of projects 95% greater then (1,988) than now (1,020) but it was on a record-breaking upward trend, while today it is sinking fast, as we have seen. While the number of jobs created by these projects (84,603) was about the same as now, it was increasing fast, having more than doubled in four years.

Although Maude’s report does not give a regional breakdown, it does say: “Inward investment plays an important role in supporting growth across all parts of the UK and last year saw strong investment and jobs growth in most regions, particularly within Wales and England…The spread of foreign investments across all parts of the UK demonstrates the strength and attractiveness of the UK as a whole for foreign investors.”

In the North East, 30 years after its FDI high point of the opening of the Nissan car factory at Sunderland, Maude was again able to point to significant foreign investments on Wearside. His report mentioned TRW and Lear Corporation, two American automotive suppliers in Sunderland, as well as £30mn invested on Teesside by two leading international suppliers of offshore wind foundations, EEW SPC of Germany and Bladt Industries of Denmark – a foretaste of developments in the same sector today. About the same time, in March 2014-15, a strategic economic plan for the North East, “More and Better Jobs”, was again drawing attention to the importance of FDI.

Comment – time for the EU single market

These statistics rise and fall in the short term. But there is no mistaking the optimism of the pre-Brexit period, with record inward investment, or the present gloom, with FDI falling through the 2020s. FDI has been important to the North East economy for decades, but today we receive the lowest regional share of incoming investments that were on the up before Brexit but are now falling fast. It’s time for the EU Single Market. 

Membership of the Single Market would give the UK frictionless access to 500mn consumers and around £10tn economic activity, according to government analysis *. Rejoining would remove customs checks, rules‑of‑origin paperwork, and regulatory divergence costs. It would result in lower costs for exporters, faster supply chains and improved competitiveness for UK manufacturing and services. These benefits would apply to foreign-owned as well as British businesses based here, encouraging them to come.

*Benefits of UK membership of the EU Single Market summarised for North East Bylines by AI.

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