The UK's modern Industrial Strategy

The United Kingdom is a thriving global economy founded on stability, fairness, and the rule of law, and propelled by world-leading sectors and companies. We have a record of extraordinary research and innovation; we are champions of openness and free trade; and we continue to be a magnet for international talent and capital.

In recent decades the pace and magnitude of global change have escalated; the global trading environment has become more unpredictable and the fragility of global supply chains more apparent. Now more than ever, businesses are seeking out countries that can provide them with the confidence to invest and grow. As set out in the Plan for Change, the UK Government’s priority mission is to deliver strong, secure, and sustainable economic growth to boost living standards for working people in every part of the UK. Our modern Industrial Strategy will help us seize the most significant opportunities and create the most favourable conditions in key UK sectors for the companies of the future to emerge here – the ones that have a transformative role to play in the clean energy transition, the tech revolution, the fundamental impact of AI on every sector, and the new geopolitics.

To achieve this, the UK Government is focused on the critical need to increase business investment, capturing a greater share of internationally mobile capital, spurring domestic businesses to scale up, and supporting small and medium-sized businesses reliant on resilient supply-chains. This is about positive choices: backing eight sectors (the IS-8) with the highest potential, and the frontier industries at their leading edge – and targeting the places and clusters across the UK that support those sectors, to increase national productivity, strengthen our economic security and resilience, and support our environmental goals and the net zero transition.

To increase investment, we want to make it easier and quicker for international, and domestic, firms to do business in the UK and we will continue to be a champion of free and fair markets, as the best route to prosperity. To support this, we will deepen our economic collaboration with our partners and forge new partnerships to promote our frontier industries and increase supply chain resilience. This will build on our Industrial Strategy Partnership with Japan and recent trade deals with the US, India, and the EU.

To ensure the Industrial Strategy drives action in our economy, we will track key measures of improvement across the whole economy, the IS-8, and places: business investment, Gross Value Added, labour market outcomes such as employment and wages; productivity growth; and exports. We will also track the number of new large ‘homegrown’ businesses across the IS-8. The Industrial Strategy and Sector Plans are underpinned by a robust monitoring and evaluation approach tracking the delivery of its policies, overseen by the Industrial Strategy Advisory Council (ISAC).

Invest 2035, our consultation, showed clearly where action must be taken, and how we need to shape the most globally competitive offer to business. The Industrial Strategy is not about a particular point in time or publication – it is a 10-year commitment and partnership. The Government has already started to take action on the areas raised by the eight sectors – from regulation to the speed of planning – and we will go further in the critical areas identified, both immediately and in the months and years ahead.

Easier and quicker

As an integral part of the growth mission, the Government will make it easier and quicker for companies to do business, giving them the stability to make long-term investments. We will do this by easing the investor journey, sweeping away barriers to investment. In particular we will:

• Tackle high industrial electricity costs, ensure strategic investment projects receive timely grid connections, invest in clean energy, and strengthen our connections to the EU energy market.

• Promote free and fair trade through strong international partnerships, including securing new and improved trading arrangements with a pragmatic, agile, smart, and fair approach to navigating a fragmented, geopolitically volatile, and tech-driven world.

• Strengthen our economic security through our uplift in defence spending, international collaboration, strategic investments in critical supply chains, technologies, and energy security, and support to businesses in understanding and mitigating risks.

• Expand access to finance, building on the commercial expertise of the market through the British Business Bank (with increased capacity and capability, and £4bn additional capital for the IS-8); expanding the mandate of the National Wealth Fund to deploy its £27.8bn capitalisation to support growth; and bringing forward legislation to increase the maximum size of UK Export Finance’s financial portfolio.

• Drive innovation, underpinned by an £86bn investment into UK R&D, targeted towards the IS-8, leveraging private investment in cutting-edge research, technologies, and commercial applications.

• Capitalise on the value of UK data by treating it as an economic asset, enabling the use of high-quality data across the private and public sectors, extending Smart Data initiatives into relevant Industrial Strategy sectors, and establishing a clear framework to value and license public sector data assets.

• Enhance skills and increase access to talent by reforming the skills and employment support system to create a strong pipeline into the IS-8, with opportunities for good jobs across the country; an increase in technology training and boosts for engineering, digital, and defence skills; and a visa system and new Global Talent Taskforce that support high-growth sectors and attract talented individuals to the UK.

• Reduce regulatory burdens and speed innovation, cutting the administrative costs of regulation for business by 25%, reducing the number of regulators, using the Regulatory Innovation Office to clear the path to market for the latest innovative challenger products, and making specific changes for sectors to support business investment.

• Remove planning barriers and give our backing to transformative infrastructure projects, including by fast-tracking decisions on critical projects stuck in the planning system.

• Ensure our tax system supports growth and high-growth sectors, with our Corporate Tax Roadmap published at Autumn Budget 2024 having set out our commitment to cap our Corporate Tax Rate at 25% and maintain other key features, such as Full Expensing.

Opportunities across the UK

The Government will enable investment and growth in city regions and clusters across the UK where the IS-8 are based, with a coherent offer across nations and regions. In particular, we will:

• Proactively bring forward more investible sites across the UK through a new £600 million Strategic Sites Accelerator; coordinated support to attract investment into our Industrial Strategy Zones (Investment Zones and Freeports); and new AI Growth Zones.

• Strengthen local business environments across the UK with increased support for regional innovation (through the new £500 million Local Innovation Partnerships Fund million fund) and skills, while offering the expertise of the Office for Investment, National Wealth Fund, and British Business Bank to help places attract private investment.

• Renew our partnerships in Scotland, Wales, and Northern Ireland, including through close collaboration with devolved governments and through flagship sectoral investments, such as supporting the Acorn CCUS project in Scotland and providing up to £750 million for the University of Edinburgh supercomputer.

• Support Mayors and local authorities in England, including by working together on the delivery of 10-year Local Growth Plans and making a new £500 million Mayoral Recyclable Growth Fund available to invest in local growth projects.

• Strengthen connections between and within our city regions and clusters to ensure that more businesses are pulled into the orbit of the best UK talent, innovation, and academic collaboration, and more people have access to good jobs. We will support a growth corridor across our Northern city regions, deepen our support for the Oxford to Cambridge Growth Corridor, and build links between and within other cities, regions, and nations through projects such as HS2, new rail upgrades in Wales, and support for the Edinburgh-Glasgow Central Belt.

Industrial Strategy Sectors

While these interventions were most frequently raised by some or all of the eight sectors (IS-8) as the most pressing issues, the Government is taking targeted action to transform our highest-potential sectors over the next decade through Sector Plans. As major initiatives we will:

• Harness the latest technologies in the Advanced Manufacturing sector through £4.3bn in funding, including up to £2.8bn in R&D programmes over the next five years to spur innovation, automation, digitisation and commercialisation.

• Drive the growth of our world-leading Creative Industries in clusters across the UK, including through a £150m Creative Places Growth Fund, new financial support for screen, music, and video games, and a new Creative Content Exchange to be a trusted marketplace for selling, buying, licensing, and enabling permitted access to digitised cultural and creative assets.

• Make the UK one of the world’s top three Life Sciences economies through a package of reforms and investment, including up to £600m for a Health Data Research Service to create the world’s most advanced, secure, and AI-ready health data platform.

• Become a Clean Energy manufacturing and innovation superpower, producing the next generation of technologies to support the global transition, and delivering our Clean Energy Superpower Mission.

• Deliver the Defence industrial base we need to protect our national security while unlocking the sector’s significant untapped potential for creating growth spillover benefits through innovation, exports, and scale-ups.

• Nurture the UK’s Digital and Technologies economy responsible for building our sovereign capability in the most strategically important areas, £670 million to drive the development and adoption of quantum computers in the UK, £500 million delivered through the Sovereign AI Unit, and a new programme of AI Growth Zones.

• Increase tech adoption and AI integration in the Professional and Business Services sector, including expansion of the Made Smarter scheme, as part of a package of over £150 million to support the sector.

• Maintain and grow the UK as the world’s leading Financial Services hub, including by rebalancing to regulate for growth, cutting red tape for FinTech firms and driving forward initiatives to open up more private capital.

• Strengthening the resilience of all the IS-8 by supporting the foundational industries in their supply chains which provide vital materials and parts, from steel to chemicals, or manage essential infrastructure, from ports to electricity networks.

Working in partnership

We will create an enduring partnership between business and a stronger, more capable, and more agile state, with far deeper penetration of business expertise and understanding of companies’ needs. In particular, we will:

• Attract private capital and build partnerships through active co-investment with industry on shared priorities, using all of our finance levers to de-risk opportunities, incentivise investment, and upskill the workforce.

• Use government’s procurement power to strengthen domestic supply chains and support good-quality local jobs, while shaping markets for innovation in the longer term.

• Make it easier for industry to navigate government, speeding up investment decision-making and improving the interface with business through a high-calibre concierge service in the Office for Investment, a growth-focused international network, and a new approach to placements with industry.

• Support small and medium sized businesses, with a new Business Growth Service to streamline access to government support, advice, and funding; initiatives to tackle the issue of late payments from large suppliers; and procurement reforms to make it easier to secure government contracts.

• Establish strong institutions to retain an unswerving focus on Industrial Strategy outcomes in policy-making and delivery, including through a permanent Industrial Strategy Council.

• Continuously monitor and evaluate the effectiveness of our policy interventions and industry’s commitments, with clear metrics and the agility to take action if we need to.

This is a very significant agenda, with considerable work to do not only by government, but the business community, local and national leaders across the UK, and trade unions. This will be complemented through economic cooperation with our international partners, building on the UK’s strength as a globally connected champion of openness and free trade. It is an approach to which the Government is fundamentally committed, as it seeks to place private business, entrepreneurship and innovation at the heart of the UK’s renewal, and which will see it play a strategic, active role beyond supporting the fundamentals of rule of law and macroeconomic stability. That is the point of our modern Industrial Strategy, and through it we will create a partnership between government, businesses and workers not just for a decade but beyond, working together confidently to create the conditions for sustained and long-term growth across our economy and throughout our nations.