Why it makes sense to invest in the UK

Publication of the government’s much trailed and highly anticipated Modern Industrial Strategy shines a light on eight priority sectors identified for growth over the coming decade. With that comes immense opportunity for innovative businesses in those sectors – both home-grown and foreign – to benefit from targeted investment support, including innovation incentives such as grants and R&D tax relief.

The eight government sectors prioritised for investment are:

• Advanced manufacturing
• Creative industries
• Clean energy
• Life sciences
• Defence
• Digital and technology businesses
• Professional and business services
• Financial services

Each sector has a bespoke sector plan, setting out the ambition for it and how that can be realised – including geographic locations targeted for growth and investment.

If you’re a company evaluating investment options, how do you determine which geographic location offers the optimum site for your new facility? Afterall, the UK isn’t the only country hoping to attract foreign investment. Competition between global governments is fierce and the UK may be among several jurisdictions hoping to appeal to companies in, for example, the digital and technology sector.

But when it comes to investment, the UK has much to offer. Here are some key considerations for companies currently contemplating where to invest and how best to execute a location strategy.

Why invest in the UK?

In a climate of shifting geopolitics, fragmented trade relationships and increasing global uncertainty, the need for stable governance has never been greater. The UK, with its long-standing democracy, rigorous legal system and strong regulatory framework, offers a comparatively safe place to make a long-term investment.

Under the Labour government, there’s been a shift towards a more interventionist approach, signalling that the government will be more willing to step in and help with negotiations around long-term investments where a company is considering the UK. This approach – described in the foreword to the Modern Industrial Strategy as “more muscular” – puts the UK on an even footing with EU countries, which have historically been more willing to support overseas companies seeking to invest. It’s an approach underscored by the increased visibility of Investment Minister, Baroness Gustaffson, who has been active in promoting the UK as a business-friendly state. The former CEO of Darktrace has been prolific across a range sectors, including clean energy. In April, for example, she jointly wrote an open letter to clean energy investors and developers inviting them to invest in Britain.

Any resultant sector funding from this and other initiatives would be channelled into designated regional investment zones, announced in March 2024.  These are intended as a mechanism for building on an area’s existing strengths in skills and established clusters to create the conditions for investment and innovation. The East Midlands, for example, will be home to green industries and advanced manufacturing, while Tees Valley will target creative industries and digital technologies.

These will sit in parallel with freeports – first announced by the Conservative government under Boris Johnson in 2020, as a way of stimulating investment across the country. Twelve key locations have been chosen, including Liverpool, Anglesey, Inverness & Cromarty Firth and Plymouth & South Devon. A range of incentives will be available in each, such as enhanced capital allowances for structures and buildings and plant and machinery.

While some of these UK locations might be unfamiliar to overseas businesses, scratch beneath the surface and you’ll find thriving clusters and innovation ecosystems supported by relevant skills, connectivity and digital infrastructure.

As an finance director or head of real estate, remember to be open to all locations rather than simply considering the obvious. An up-and-coming location designated a freeport or investment zone might make a better option than a saturated overseas location. The Greater Manchester Investment Zone, for example, will build on its existing strength as a world leading sustainable advanced materials R&D asset base, to support an ecosystem of advanced materials and manufacturing businesses. The Liverpool City Region will evolve its strength in life sciences, while Scotland will enhance its thriving infrastructure of clean energy businesses.

Across each of the priority growth sectors, businesses will find a wealth of talent to support innovation. The UK is home to some of the world’s best universities, including to four of the top ten global universities for life sciences and medicine. Alongside that sits a world-class research base, making the potential for collaboration huge. The government will focus on routes to collaboration as part of its Modern Industrial Strategy, as well as putting in place other targeted interventions to ensure that the UK has the skills needed to support the jobs of tomorrow.

What should I do next?

Given the breadth of opportunity that the UK has to offer innovative businesses, it can be difficult to know where to start. This is particularly true if you’re keen to avoid the obvious and explore up and coming locations, where government incentives are most readily available. Partnering with an experienced location strategist can help you to discover emerging locations and access government support – particularly if your business sits within one of the government’s target growth sectors.

At ForrestBrown, our experienced location strategy team has an abundance of experience in advising large multinationals on their next investment. Our perspective is global and we can help to determine the best location to suit your business and support growth.

Whether you’re a life sciences manufacturer seeking a new manufacturing facility or a renewable energy company looking to invest in the technologies of the future, we have a tried and tested process to ensure that you make the right decision. We blend algorithmic insights with human judgments to provide tailored advice free from portfolio conflict.

When we’ve narrowed down the list of potential locations to the final few, we’ll undertake on-the-ground due diligence, as well as negotiating government incentives on your behalf. By adopting this approach, not only will you reduce the day-to-day workload associated with sourcing a new location, but you’ll be assured of the best outcome for your investment.