Executives at multinational firms say that national approaches to regulating artificial intelligence (AI) are playing a growing role in decisions about where to locate new sites, R&D centres and production capacity. The Financial Times reports that continental Europe is perceived by many companies as falling behind the United States and the United Kingdom in this competition.
What companies evaluate
Leaders in the financial, industrial and technology sectors told researchers they routinely assess an individual country’s AI talent pool, digital and compute infrastructure, and the predictability of its regulatory framework when choosing investment locations. One large American bank uses a traffic‑light system to rate countries: the assessment checks whether a government treats AI as a priority and whether data‑handling rules permit corporate and customer data to be used for AI purposes. The bank said countries rated “red” are less likely to see staff expansion.
The EU’s balancing act
The European Union has created a comprehensive legal framework for AI with the AI Act, but companies cite the cost and complexity of the EU regulatory model as a significant factor when deciding whether to build in Europe, the United States or Asia. Laura Houston, co‑head of the technology practice at Slaughter and May, highlighted this regulatory burden.
UK and US seen as more AI‑friendly
The United Kingdom is commonly regarded as “green” under the bank’s traffic‑light system because it applies a more permissive regulatory approach. This permissiveness has already influenced concrete decisions: Danish pharmaceutical company Novo Nordisk established a London AI centre as part of its drug‑research partnership with Amazon Web Services. Anja Leth Zimmer, Novo’s AI director, said the company locates work where suitable AI talent exists and where it can operate responsibly.
Structural disadvantages in Europe
Zach Meyers of the Centre on Regulation in Europe in Brussels listed several structural challenges weighing on Europe’s competitiveness: slower deployment of data centres, higher energy costs, slower consumer and corporate AI adoption, and substantially smaller funding volumes compared with US investments.
Companies factor in ‘AI maturity’
Caspar Herzberg, head of industrial software at Schneider Electric, said his company will consider an individual country’s “AI maturity” — including expertise, compute capacity, energy networks and cutting‑edge AI research — when making investment decisions. Maria Cristina Bifulco, strategy director at Prysmian, warned that if Europe fails to create favourable conditions, investments may flow to markets offering AI‑friendly policies and more predictable regulation.
European Commission response and stakes
The European Commission has argued that projects such as AI gigafactories will expand the bloc’s compute capacity. Nonetheless, regulators face a difficult trade‑off between encouraging the spread of AI and reducing dependence on American tech giants.
Why this matters
A shift of AI activities toward the US and UK could have long‑term effects on European labour markets, R&D capabilities and technological sovereignty. Companies’ choices about where to place AI work are driven not only by market advantage but also by regulatory predictability and infrastructure availability.
Related event
Further discussions on these topics are scheduled for the Portfolio AI & Digital Transformation conference on 26 November 2026.
The cover image is illustrative. An AI assistant took part in preparing this article; the final content was edited and verified by our journalist.
