European expansion a hive of activity
March 14, 2025
While the big economies of Western Europe might be experiencing a downturn, foreign companies are still keen to expand their overseas reach into European territory. The UK and Spain, with their access to non‑European markets, are holding their own against powerhouses such as Germany.
Who is investing in Europe?
While US companies still dominate Western European expansion, businesses from other regions, such as China, Japan, and the Middle East, are increasingly establishing a presence. ‘Countries like Germany, the UK, France, and the Netherlands are the top countries for attracting overseas expansion,’ said Andreas Wiedmann, Audit Partner at Kreston Bansbach. ‘Germany is known for its highly skilled workforce, strong manufacturing base, and stable economy. The UK remains attractive due to its financial services expertise and cultural affinity with US investors, despite Brexit. France’s recent tax reforms and burgeoning tech ecosystem have positioned it as a hub for innovation. Meanwhile, the Netherlands excels with its business-friendly policies, excellent infrastructure, and strategic location as a logistics hub.’
Wiedmann pointed out that these countries share common features, such as high disposable incomes, innovation-driven economies, and stable political environments, making them prime destinations for mid-market entrepreneurs.
The UK’s post-Brexit advantage
The UK’s network of post-Brexit free trade agreements with non-European countries is turning into an advantage for companies looking to base themselves in the country. It allows them to establish a foothold in Europe while still reaching non-European markets. ‘Despite Brexit, the UK’s advanced infrastructure and global connectivity continues to draw investors,’ said Mercè Martí Queralt, Chairwoman and C.E.O. of Kreston Iberaudit.
Spain’s economic boom
Spain is also booming. While Europe’s other large economies are plunged in gloom, Spain’s is soaring. It is set to grow 3% this year, almost four times the euro-area average. Martí Queralt has seen foreign investment in Spain during the first half of 2024 reach EUR 12.881, with the United Kingdom being the largest investor, followed by the US and France.
‘A large domestic market and strategic connection to Latin America and Africa are the big drivers for investment,’ said Martí Queralt. ‘Spain also offers more competitive living costs and wages compared to Western Europe. Spain has gained a lot of traction on other European countries, particularly in financial services and infrastructure.’
Key sectors driving European expansion
Several sectors are thriving in Western Europe, but technology, renewable energy, and healthcare stand out, according to Wiedmann. The region’s emphasis on digital transformation and sustainability has positioned the tech and green energy sectors for substantial growth. Europe’s aging population and focus on healthcare innovation have driven significant investment in biotech and medtech industries, while logistics and e-commerce continue to perform strongly, driven by the boom in online retail.
Challenges of expanding into Europe
While expansion in Europe undoubtedly holds many advantages, it can be a complex environment to set up shop in. Companies face unexpected challenges, such as a fragmented regulatory environment, with significant differences between EU member states. There can be cultural nuances, with business practices and consumer behaviours varying widely. Strict labour protections and high employment costs in some countries can impact operational flexibility and, despite incentives, navigating complex tax regimes can be daunting without proper guidance.
Bureaucracy dogs Spain in particular. ‘One of the main challenges for businesses setting up in Spain is bureaucracy,’ said Martí Queralt. ‘For example, business registration can be perceived as slow and complex compared to other countries. Strict anti-money laundering regulations, coupled with tighter controls, can make account opening a lengthy process.’
Spain’s cultural and linguistic diversity between regions is significant. Businesses must also navigate Spain’s fiscal system, encompassing national, regional, and local taxes.
Finding the right partner for European expansion
Companies are looking for the right partner to make European expansion as smooth and financially efficient as possible. ‘Being part of the Kreston network means we can provide a unique combination of global expertise and local knowledge,’ said Wiedmann. ‘This makes us an invaluable partner for companies expanding into Europe. We can offer deep local expertise, sector-specific knowledge and cross-border coordination. We are best placed to allow mid-market entrepreneurs to confidently navigate the European market, leveraging insights and connections that drive long-term success.’
The value of Kreston’s Global network
Martí Queralt finds the 360 service to be a key selling point for new clients. ‘Kreston offers integral support across all internationalisation areas, including audit, consultancy, taxation, corporate finance, and outsourcing, ensuring clients address every aspect of their expansion with a single expert partner,’ she said. But one of the best things that Kreston partner can offer is the protection of the Kreston brand. When they are backed by a well-established multidisciplinary audit firm, clients gain credibility, something that cannot be bought.
