What the UK and South East of England can learn from economically booming US cities and states

On a recent trip to the US, it was clear that certain states are booming, driving economic growth through targeted policies and initiatives that are attracting people and businesses in significant numbers. In recent years, estimates have suggested that around 170 people a day were relocating to the Austin metropolitan area in Texas, one of the cities visited during our trip.

As regions around the world compete for global investment, the examples of Nashville, Tennessee and the State of Texas stand out. Their approaches to economic development offer lessons for the UK Government and for promoters of economic growth in the South East of England, which remains one of the UK’s strongest‑performing regions.

At the same time, both Nashville and Austin are becoming increasingly attractive destinations for UK businesses seeking to establish a foothold in the US – underlining how critical the choice of landing jurisdiction can be for long‑term success.

Nashville and Texas compete for investment

1. Pro‑business tax and regulatory environments

Tennessee offers no income tax on wages, a low overall tax burden and targeted job‑creation credits; a far stretch from the high‑tax environment of the UK where both employers and employees are feeling very heavily taxed.

Texas deploys extensive incentives including the Texas Enterprise Fund, R&D credits and exemptions for manufacturing and data‑centre investment. Both create stable, low‑friction regulatory environments that global investors value.

Whilst the South East cannot currently provide such a low‑taxation environment, it can better promote itself to overseas investors through access to the UK’s enterprise hubs and innovation districts (such as the Cambridge Biomedical Campus, established science parks and university‑linked innovation centres) and the UK’s still‑competitive tax reliefs for R&D‑intensive businesses.

Tech and innovation hubs such as the Surrey cluster around Redhill, deserve support from the local community of professional advisers, such as the Birketts Small Deals Team and tech start‑up support initiatives.

The South East has a lot to shout about, but Austin and Nashville may well be doing this more effectively. Groups like the South East All‑Party Parliamentary Group (SE APPG) aim to do just this.

2. Sector‑focused growth strategies

Nashville has built strong clusters in healthcare, technology and creative industries, attracting large employers such as Amazon, Oracle and HCA Healthcare. Texas emphasises energy, semiconductors, aerospace, life sciences and advanced manufacturing, supported by long‑term strategic planning. Austin learned early lessons from a lack of economic diversification and has since focused on broadening its economy so as to be better able to withstand sector specific slowdowns.

The South East has a diverse range of businesses and sector hubs that are highly attractive to overseas investment. With Redhill being a centre of cybersecurity and digital technologies (within the wider Surrey cluster), Kent establishing itself in the life sciences/biotech/agri-tech sectors and other locations such as Farnborough and the Solent region being hubs of defence and aerospace, not to mention wider centres such as Cambridge offering a world leading life sciences hub, the UK has the right sector expertise and diversification in place to “do an Austin or Nashville”. This raises the question of why recent economic growth data has appeared comparatively bleak (putting developments in the Middle East to one side).

The Government should focus more on enabling these sectors to take risks, attract investment and promote themselves through chambers of commerce and trade bodies. Initiatives such as the Texas trade association opening in London and other economic development organisations which have an active presence in London, as well as cross‑border chambers of commerce such as BritishAmerican Business (BAB) are examples of the art of the possible. Having dedicated organisations like Opportunity Austin, acting solely to grow the regional economy, has proved hugely successful. This is why the South East needs to get behind the SE APPG and its chambers of commerce; counties have historically promoted themselves individually and perhaps this is an opportunity for them to see what they can achieve together as collaborators rather than competitors. The model has been shown to work in Austin, with Nashville achieving a similar outcome through a combination of city, chamber and state‑level economic development bodies rather than a single standalone organisation.

3. Infrastructure and quality of place

Massive capital projects – such as Nashville’s multibillion dollar airport expansion programme and the redevelopment of the East Bank and Nashville Yards – are central to its investment appeal. Nashville’s regional planning emphasises mobility, housing and urban vibrancy. Texas’s state‑level economic planning likewise places infrastructure and innovation at the centre of competitiveness.

In the UK, the Government has provided the South East with a significant opportunity in approving plans for a second runway at Gatwick. Actors in the South East economy should be supported by the UK Government to ensure it is fully capitalised on – by setting up hubs, offering targeted reliefs and breaks, and providing practical support to businesses seeking to expand into the UK. By way of example, Opportunity Austin provides businesses relocating to Austin with free physical workspace while they establish themselves.  This model of supporting start-ups entering new markets has worked in other jurisdictions too.

Maybe the proposed local government reform replacing the current two-tier system of county and district councils with a single-tier unitary authority can replicate some of the benefits we see in the US system where US states have a large amount of control over what happens on their patch.

What can these states offer UK businesses expanding overseas?

We are often asked by clients wishing to expand to the US: “Where do I go?”.

The different US states can have vastly different approaches, with some being seen as more “business‑friendly” than others. Cities within states also have different sector specialisms, with Dallas widely regarded as a hub of VC and private equity activity, Austin actively growing that sector through incubator funds, and Nashville’s largest economy focussing on healthcare (as opposed to country music, which the healthcare sector dwarfs by a very significant margin).

Having just been to Austin and Nashville, what can these states offer UK businesses expanding overseas?

1. Strong talent pipelines and high‑growth sectors

Nashville’s rapid expansion in technology, healthcare and creative industries – fuelled by major inward investment from firms such as Amazon and Oracle – creates fertile ground for UK businesses seeking access to skilled labour and fast‑growing markets.

Austin benefits from Texas’s broader positioning as a powerhouse in technology, innovation and advanced industries. Texas is home to more than 50 Fortune 500 companies, reflecting deep economic strength and diversified demand.

2. Quality of life and business‑friendly operating conditions

Nashville’s cultural vibrancy, expanding infrastructure and strong population growth make it attractive to firms needing to relocate staff or attract new talent.

Austin similarly benefits from Texas’s pro‑enterprise climate, wide pool of skilled workers and significant innovation ecosystems – factors reinforced by Texas’s active international engagement in London.

3. Strategic support for international firms

Both regions actively court inward investment and offer structured assistance through incentives, industry networks and relocation support. Tennessee provides accessible grants and credits for growing firms. Texas’s global‑facing economic mission – evidenced by the Texas–UK cooperation agreements – signals support for British businesses establishing a US base.

Why jurisdiction matters for UK businesses entering the US

When expanding into the United States, the jurisdiction a UK company selects will significantly affect its operational success. Taxation, regulatory burdens, incentives, talent availability, infrastructure, cost of living and the presence of sector‑specific clusters vary widely between the states. Nashville’s and Texas’s models demonstrate how these factors can align to create particularly favourable landing environments. Their clarity of sectoral focus, supportive incentives and strong labour markets can materially improve a UK firm’s US market‑entry prospects.

What the South East of England already does well

1. High‑skill, high‑productivity sectors

The South East already hosts globally competitive clusters in technology, life sciences, professional services and advanced manufacturing, helping it outperform the rest of the UK.

2. International connectivity

The region contains vital air and port gateways and plays a central role in the UK’s trading relationship with Europe. This connectivity should bolster international investor confidence. Despite Brexit, the UK should continue to be promoted as a gateway to Europe given the close ties between the UK and the EU.

Conclusion

Nashville and Texas show how targeted incentives, clear sector positioning, infrastructure investment and workforce development can attract sustained inward investment. Their approaches offer valuable lessons for the South East of England while also shaping the landscape into which UK businesses expand.

For UK companies entering the US market, the choice of jurisdiction is a strategic decision with significant consequences. Cities like Austin and Nashville – underpinned by supportive state policies, high‑growth sectors and strong talent pipelines – are increasingly compelling landing points. At the same time, the South East’s own strengths and international connectivity continue to underpin its competitiveness in the global investment economy.