Barclays has called for a major overhaul of the UK’s approach to attracting international capital, warning on Tuesday that the country has “lost control of its international narrative” and is becoming less successful at securing a share of global investment flows.

The bank said the UK hosted more than £12 trillion of foreign capital in 2025, making it the world’s second-largest destination after the US, but its share of global foreign capital fell to seven per cent from 8.6 per cent in 2015. According to Barclays, maintaining its previous share would have left the UK with around £2.5 trillion more foreign capital today.

Barclays’ report argues that the decline reflects intensifying competition from faster-growing economies rather than a fundamental deterioration in the UK’s attractiveness. The lender said many foreign-owned businesses operating in Britain continue to generate strong profits but have become less willing to reinvest, citing economic uncertainty rather than weaker competitiveness.

CS Venkatakrishnan, group chief executive of Barclays, said: “Foreign investment plays a critical role in supporting UK economic growth. While we have a long history as a prime destination for international capital, we must now fight more assertively for our place in an increasingly competitive world.”

The report contends that the UK has focused too heavily on foreign direct investment, which accounts for only around one-fifth of total foreign capital held in the country. Barclays said policymakers should place greater emphasis on foreign portfolio investment and cross-border deposits, which together account for roughly 80 per cent of foreign capital, including £4.1 trillion in portfolio investment and £5.7 trillion in deposits.

Barclays proposed four policy changes, including broadening the UK’s investment strategy beyond foreign direct investment, developing a stronger international investment narrative, increasing policy certainty to encourage long-term reinvestment and adopting a more targeted approach to different investor groups. The bank said the government should consider making foreign portfolio investment wins an official performance measure and set a goal for 95 per cent of leading emerging-market investors to establish a UK presence by 2030.

Lord Richard Harrington of Watford, author of the 2023 Harrington Review of Foreign Direct Investment, said: “If the UK is to deliver an investment-led growth model, it must not only remain open, but be more deliberate in how it attracts, retains and deploys international capital across the entire system.”

Anjalika Bardalai, chief economist and director of economic research at TheCityUK, said the research highlighted that while Britain continues to attract substantial levels of foreign capital, “the underlying data shows the relative decline of its global market share, as investment grows more quickly elsewhere”.

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