How to determine your location strategy in a fast-changing global landscape

Investing in a new location is challenging; particularly in a fast-changing global environment. The investment landscape is quickly shifting from globalisation to a fragmented, multipolar economy as emerging economies grow and new technologies evolve. Traditional models of open markets and integrated supply chains have been usurped by new trading blocs – often founded on geographies or ideologies.

Countries and governments have adopted different responses, including the UK, where the Labour government has become more interventionist. But in a changing world, how can businesses seeking a new location determine where to invest?

We set out the key considerations for companies.

Background context: geopolitical & geoeconomic fragmentation

Challenges to the global economic order began during the COVID-19 pandemic, when governments began to realise the impact of their exposure to supply chain disruptions. In response, they focused on building resilience within their supply chains and introduced incentives or tariffs to encourage the private sector to support them in their efforts.

That trend has accelerated rapidly, particularly in the last couple of years. The emergence of new strategies has implications for investment decisions, prompting companies to look at geographical diversification to future-proof their location. For example, export controls and tariffs on sensitive technologies such as AI and semiconductors are encouraging firms to relocate R&D and manufacturing to “safe haven” locations. Similarly, being located in a particular country that’s part of a trading bloc might make it difficult to trade with or export to another country in a different bloc.

How are government’s responding?

There’s a huge desire amongst governments globally to attract inward investment, with a vast range of policy being used to support that. We’re seeing subsidies, tax credits, grants, and procurement access all being deployed as part of the toolkit.

In the US, for example, 100% tariffs have been placed on certain pharmaceutical imports unless the manufacturer is building a factory there. In contrast, the UK government has adopted a different approach to supporting its life sciences sector by offering capital expenditure grants that subsidise up to 20% of the business’s total capital expenditure costs, as well as leading negotiations on drug pricing via the NHS.

UK government response

Earlier this year, the UK government published its Modern Industrial Strategy setting out its eight priority areas for growth:

• Clean energy & hydrogen (net zero);
• Advanced manufacturing (including aerospace and automotive);
• Life sciences;
• AI & digital technologies (including quantum computing and semiconductors);
• Defence;
• Financial services;
• Business and professional services; and
• Creative industries.

A range of incentives are available to support businesses in these sectors and dedicated investment agencies that address specific local needs exist in each of the devolved nations. In England, there is a growing push to empower high-performing local authorities – some of which may receive up to £30 million each – to support the development of local industrial clusters, drive innovation, and stimulate economic growth. This signals a shift toward a more decentralised approach to investment promotion – in line with that adopted by the Welsh and Scottish governments through Scottish Enterprise and the Welsh Development Agency.

Freeports and investment zones

A central plank of the UK government’s strategy of attracting inward investment into the UK is freeports and investment zones. Each has its own advantages, with freeports offering:

• customs and tax benefits;
• simplified import/export procedures; and
• innovation hubs near ports and airports.

Located nationally from Plymouth and South Devon in South West England, to Inverness and Cromarty Firth in Scotland, each geographic location has a different area of focus. Teesside, for example, is focused on clean energy and green technology investment, while Liverpool is focused on maritime. Whatever the area of focus, the benefit of a freeport for businesses is that if they’re importing parts, processing them and exporting them again, tariffs are typically avoided as the parts are not technically entering the UK. This makes freeports a good option to future-proof an investment against any changes in tariffs.

Investment zones focus on high-growth sectors like digital, life sciences, and advanced manufacturing and offer benefits such as low employment costs through lower national insurance contributions. If you’re investing in constructing a facility within the investment zone, you’ll also be eligible for targeted tax incentives such as business rate relief and enhanced capital allowances.

Key points for businesses to consider when investing

There’s a huge amount for businesses to consider when investing in a new location. Aside from market access and geopolitical alignment, investment decisions must consider:

• energy costs and infrastructure;
• digital connectivity;
• industry clusters; and
• labour/talent availability.

Carefully evaluate your critical success factors

Whatever weight a business gives to each factor, the central point is that a business’s long-term plans and the local jurisdiction plans must align. Experience tells us that making a location strategy decision based solely on accessing grants or incentives doesn’t work.

Businesses must carefully evaluate their critical success factors at the outset. After a few years, the benefit of any incentive typically fades away, so it’s important to ensure that the chosen location is optimal for end customers and that the right talent can be recruited.

Make sure the location fits your long-term business plans

In other words, incentives should not drive the location strategy. Instead, businesses should identify their priorities, work out where their customer base is and ensure that the location fits the long-term business plans. Incentives can then be utilised as a mechanism for facilitating them.

Align your approach with the local authority’s goals

Remember too, that wherever possible, a business’s approach to incentives should be aligned with what the local authority is trying to achieve. This is typically job creation in return for investment. If the local authority and the business priorities align, then that’s the perfect basis for a successful investment and partnership with the local authority.

Don’t rush, but do make discussions with local authorities an early priority

Last but not least, when seeking funding from a local authority, businesses shouldn’t leave it to the last minute. Engage with local development agencies and the government bodies during the early stages of the process, when options are still being explored. This is when local authorities are more inclined to help businesses, enabling them to achieve a better outcome – and one that will yield long-term returns.

This is an abridged version of a webinar delivered by Karim Budabuss to techUK members on 7 October 2025.