EY, the professional services firm, has discovered in its 22nd Europe Attractiveness Survey — which looks at how different European countries fare as investment destinations — that the number of UK tech projects receiving FDI declined from 305 in 2021 to 234 in 2022, representing a change of nearly a quarter (23.3%).

Additionally, according to the firm’s survey, the UK’s share of Europe’s FDI for tech projects fell from 29.2% in 2021 down to 19.8% last year, as European countries played catch-up to recent UK growth in this sector.

However, despite the fall in tech market share, the UK was still the leading country in Europe for tech-related FDI.

Stepping back and looking at projects across all business industries and sectors, the UK had 929 FDI-backed projects in 2022, down from 993 in 2021 (-6.4%), and down from 975 in the pandemic-stricken year of 2020 (-4.7%).

Further, the UK’s 15.6% share of all European FDI projects in 2022 was down from 16.9% in 2021. UK project numbers reached a record high in 2017 with 1,205 total projects.

The UK’s leading sectors for FDI-backed projects in 2022 were tech (234), financial services (76), business and professional services (70), utility supply (68), and agri-food (61).

EY points to both political and economic turbulence as the likely reasons behind the across-the-board decline. “Political uncertainty and the ongoing impact of Brexit on trade and investment will likely have played a part in the UK’s performance – but Europe-wide factors, such as high energy prices and high inflation, will have had an impact on the UK’s attractiveness too.”

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Peter Arnold, EY’s UK Chief Economist, commented on the survey’s UK tech-related findings, saying: “The UK’s tech sector typifies the country’s overall performance: project numbers are down but value remains solid with smaller projects not being prioritised.

“The sector has faced significant global headwinds, while the UK’s loss of market share may also represent other countries playing catch-up in the wake of the UK’s stellar tech performance from 2016 to 2019.”

Earlier this week, DIGIT reported on the news that Nikolay Storonsky, the CEO of Europe’s most valuable fintech company, Revolut — which is based in London — criticised Britain’s “extreme” bureaucracy.

Kemi Badenoch, the Secretary of State for Business and Trade, has sought an emergency meeting with Revolut over fears that the company may leave the UK.