Britain has “lost control of its international narrative” and is paying a heavy price in lost foreign investment, Barclays has warned, as the bank calls for a wholesale rethink of how the UK competes for global capital.
In a new report, the lender reveals that the UK’s share of global foreign capital has slipped to 7 per cent in 2025, down from 8.6 per cent a decade earlier. Had Britain simply held its ground, it would today be home to an additional £2.5 trillion of overseas money.
The decline comes despite the UK hosting more than £12 trillion in foreign capital last year, a stockpile second only to the United States, underscoring what the bank describes as the country’s “resilience and enduring role as a global financial hub”.
CS Venkatakrishnan, the Barclays chief executive known in the City as Venkat, said the UK could no longer rely on its historic pulling power. “We must now fight more assertively for our place in an increasingly competitive world,” he said. “Predictable policy, regulatory and business environment boosts investor confidence, underpinned with a clearer story on our advantages as a home for global capital flows.”
Perhaps the report’s most uncomfortable finding for ministers is that foreign firms operating in Britain are making record profits, yet choosing not to reinvest them here. Barclays attributes this “reduced desire to invest for growth” to economic uncertainty rather than any loss of underlying competitiveness, a distinction that will offer the Treasury only partial comfort.
“Narratives play a pivotal role in shaping foreign investment intentions,” the report states, “and there have been occasions in the recent past when the UK has lost control of its international narrative, to the detriment of foreign investment.”
The findings chime with wider warnings about Britain’s appeal to overseas capital. Foreign investment in UK commercial property fell 30 per cent in the first quarter of 2026, while industry figures have cautioned that the UK’s life sciences sector is slipping down the global investment rankings.
Barclays is careful, however, to push back against the claim that Brexit has made Britain uninvestable. Around three in five economies have actually increased the share of their outward investment directed at the UK since 2015, the report finds. Some erosion of market share was “not entirely unexpected”, it adds, given the UK’s historic slice of global capital was always outsized relative to its share of world GDP, and faster-growing emerging markets are inevitably drawing capital their way.
The bank sets out four policy shifts it believes would put the UK on an investment-led growth footing: greater policy certainty, a sharper international narrative, a more targeted approach to different investor types, and, most pointedly, a strategy that looks beyond foreign direct investment.
FDI, Barclays argues, is “too narrowly” the focus of government effort. Foreign portfolio investment, worth £4.1 trillion, and cross-border deposits of £5.7 trillion together account for roughly 80 per cent of the foreign capital sitting in the UK, yet attract a fraction of the policy attention. Official figures from the Office for National Statistics show the narrowness of that lens: inward FDI flows fell to £13.4 billion in 2024, with the UK’s inward FDI position dropping by £75.4 billion.
In today’s climate, the report warns bluntly, “capital no longer arrives by default”.
Venkat’s intervention lands against a backdrop of growing unease in the banking sector over a possible tax raid, with lenders’ profits swelling amid the market volatility triggered by conflict in the Middle East. The Barclays boss has previously warned the chancellor against taxing growth “out of existence”.
Speaking after Barclays’ first-quarter results, he noted that UK banks face an effective tax rate of 46 per cent, higher than any other major jurisdiction, compared with between 29 and 40 per cent across Europe and around 20 per cent in the US.
“We are a leading exporter of financial services in the UK. The UK needs growth. The UK needs income, and banks like ours play a really, really important role in that,” he said.
Amy Ingham
Amy is a newly qualified journalist specialising in business journalism at Business Matters with responsibility for news content for what is now the UK’s largest print and online source of current business news.