UK Records Lowest Investment Inflows in G7 Despite Growth Stimulus in 2025

• Why Is the UK Struggling to Attract Investment in 2025?
• How Do Other G7 Economies Compare?
• Which Major Companies Are Pulling Out?
• What’s the Human Impact?
• Can the UK Close the Gap?
• UK Investment Crisis: Your Questions Answered

In a surprising twist for 2025, the UK has landed at the bottom of the G7 rankings for foreign direct investment (FDI), despite government efforts to boost economic growth. Official data reveals a stark contrast with peers like Japan (27.4% investment-to-GDP ratio) and Italy, which now leads the G7 in economic resilience. What’s behind Britain’s investment drought—and can it be fixed?

Why Is the UK Struggling to Attract Investment in 2025?

The Office for National Statistics (ONS) reports that UK investment inflows stagnated at just 18.6% of GDP in Q3 2025—the lowest among G7 nations. For context, Germany, despite its post-war record stagnation, still outperformed Britain. Analysts blame a perfect storm: bureaucratic planning delays, post-Brexit regulatory uncertainty, and a corporate culture skewed toward short-term gains. As Tera Allas of the Productivity Institute bluntly put it, "The UK’s planning system is like running through treacle—investors lose patience before approvals arrive."

How Do Other G7 Economies Compare?

While the UK flounders, other G7 members are racing ahead:

• Japan (27.4%): Infrastructure spending spree drives record FDI
• Italy: Meloni’s tax cuts for expats and labor reforms catapulted it to #1
• Germany: Despite recession, still drew 21.3% investment share

Notably, Italy’s turnaround—from "Europe’s sick man" to top performer—highlights what proactive policy shifts can achieve. The UK’s relative decline seems self-inflicted.

Which Major Companies Are Pulling Out?

The investment slump isn’t theoretical. Pharma giants are voting with their feet:

South African billionaire Jonathan Oppenheimer summarized the mood: "The UK’s planning rules make molasses look speedy."

What’s the Human Impact?

Beyond corporate exits, everyday Brits feel the squeeze. Consumer spending dipped for the first time since 2020 (Barclays data shows a 0.2% YoY drop), even as "small luxuries" like premium coffee and cinema tickets oddly thrive. It’s a paradox—a nation cutting back while craving comfort.

Can the UK Close the Gap?

The Productivity Institute calculates Britain WOULD needto match German/Dutch investment levels at current growth rates. With Labour’s tenure seeing economic contraction in 9 of 16 months, the clock is ticking. As one BTCC market analyst noted, "Investors aren’t just comparing the UK to its past—they’re comparing it to Europe’s present."