UK has ‘lost control’ of its international narrative, says Barclays
Barclays has laid bare the investment barriers facing the UK in a new report that states the nation has “lost control of its international narrative” leading to an impact on foreign capital.
The banking giant has called for a drastic shake-up of how the UK attracts international capital, following its share narrowing to seven per cent in 2025 from 8.6 per cent just a decade prior.
The report notes whilst the UK hosted over £12 trillion in foreign capital in 2025 – second only to the US – this figure would today be £2.5 trillion higher if it had maintained its previous share.
The bank’s chief executive CS Venkatakrishnan – known as Venkat – said: “We must now fight more assertively for our place in an increasingly competitive world…
“Predictable policy, regulatory and business environment boosts investor confidence, underpinned with a clearer story on our advantages as a home for global capital flows.”
The report specifically points to the UK being unable to inspire long-term confidence as foreign firms operating in the UK secure record profits but opt not to reinvest. It attributes this to “reduced desire to invest for growth” to “economic uncertainty rather than a loss of underlying competitiveness.”
It adds: “Narratives play a pivotal role in shaping foreign investment intentions, 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 UK’s declining share in foreign capital was listed as “not entirely unexpected,” namely due to the historical share of global foreign capital has been “very high relative to its global GDP share”.
“As other economies, including emerging markets, grow faster than the UK, foreign capital is drawn towards these markets.”
Barclays: ‘Capital no longer arrives by default’
But the report pushes back against claims the UK has seen a decline in investability since Brexit, with around three in five economies having increased their share of outward investment directed to the UK since 2015.
“Throughout the ten-year period, the UK continued to attract and retain large volumes of foreign capital, underscoring its resilience and enduring role as a global financial hub,” the report said.
The blue-chip lender set out four central policy shifts, where it states the UK can build an investment-led growth mode. These include providing greater policy certainty and adopting a more targeted approach across investor types.
It also calls for the UK to broaden its strategy beyond foreign direct investment, which it “too narrowly” focuses on. The report highlights a need for greater focus on Foreign Portfolio Investment (FPI), which makes up around 80 per cent of the UK’s foreign capital at £4.1 trillion and cross-border deposits at £5.7 trillion.
The report warns that in the current economic climate “capital no longer arrives by default”.
Venkat has previously sounded off on political uncertainty amidst fears the banking sector might be turned to for a tax grab as sector profits rose amidst the volatility of the war in the Middle East.
Following Barclays’ first-quarter financial results, he warned: “Banks in the UK are more highly taxed than they are in any other major jurisdiction.”
He pointed to the sector’s 46 per cent rate in the UK, compared to Europe ranging between 29 per cent to 40 per cent and the US’ around 20 per cent.
“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 added.