The UK government has launched a landmark Modern Industrial Strategy, setting out a bold 10-year plan aimed at transforming the country into a global industrial powerhouse. The strategy focuses on accelerating business investment, cutting electricity costs for thousands of manufacturers, and creating 1.1 million well-paid jobs across eight priority sectors. This comprehensive approach seeks to provide long-term economic stability and position the UK as the best place to invest, innovate, and grow a business.
A Decade-Long Vision for UK Industry and Growth
The newly published Industrial Strategy outlines a clear economic roadmap through 2035, targeting eight high-growth sectors where the UK already holds competitive advantages. These sectors include advanced manufacturing, clean energy, creative industries, defence, digital and tech, financial services, professional and business services, and life sciences.
The government plans to nearly double annual business investment in these sectors, supported by a commitment to increase research and development (R&D) spending to £22.6 billion per year by 2029-30. This includes over £2 billion earmarked for artificial intelligence and £2.8 billion for advanced manufacturing innovation over the next decade.
Prime Minister Keir Starmer described the strategy as a “turning point for Britain’s economy,” emphasizing a break from short-termism toward a future of sustained investment, innovation, and job creation that benefits working people across the countr.
Key Pillars of the Modern Industrial Strategy
Cutting Electricity Costs to Boost Competitiveness
One of the most significant reforms is the introduction of the British Industrial Competitiveness Scheme, which will reduce electricity costs by up to 25% for over 7,000 electricity-intensive businesses in sectors such as automotive, aerospace, and chemicals starting from 2027. This move addresses a critical barrier to growth identified by industry leaders and aims to level the playing field for UK manufacturers competing globally.
Business Secretary Jonathan Reynolds highlighted that lowering energy costs and addressing workforce skills shortages are central to enhancing the UK’s industrial competitiveness.
Driving Innovation Through Increased R&D Investment
The strategy commits to a substantial increase in R&D funding, aiming to leverage billions more in private investment. Key initiatives include:
- £240 million dedicated to advanced connectivity research and development.
- £670 million funding package to accelerate quantum computing capabilities, including long-term support for the National Quantum Computing Centre.
- £35 million for the Semiconductor Talent Expansion Programme, focusing on education and skills development.
- £41 million to deploy low-Earth-orbit satellites for improved connectivity on mainline trains.
These investments are designed to foster technological breakthroughs in AI, biotechnology, autonomous vehicles, and advanced manufacturing.
Supporting Business Growth and Reducing Regulatory Burdens
The government plans to unlock billions in finance for innovative businesses, especially small and medium-sized enterprises (SMEs), by increasing the British Business Bank’s capacity to £25.6 billion. Additionally, the strategy aims to reduce the administrative costs of regulation by 25% and streamline the number of regulators, making it easier and faster for businesses to invest and expand.
Efforts to attract global talent include visa and migration reforms and the establishment of a Global Talent Taskforce, ensuring the UK can compete internationally for skilled professionals.
Sector-Specific Highlights and Regional Investment
Advanced Manufacturing
The Advanced Manufacturing Sector Plan aims to position the UK at the forefront of tackling global challenges such as decarbonisation and digital transformation. The government targets growth in six key industries: advanced materials, aerospace, agri-tech, automotive, batteries, and space.
Notable investments include:
- Siemens Gamesa’s £186 million wind turbine factory in the Humber Freeport.
- Sumitomo’s £350 million subsea cable factory in Inverness.
- Nissan’s up to £1.12 billion investment in the North East England Investment Zone, contributing to a total cluster investment of £2 billion.
Clean Energy and Life Sciences
Clean energy industries will see investment levels double to over £30 billion per year by 2035, supporting the UK’s net zero goals. The life sciences sector aims to become one of the world’s top three economies, with reforms and up to £600 million invested in a Health Data Research Service to develop an AI-ready health data platform.
Creative Industries and Professional Services
A £150 million growth fund will support the UK’s creative industries, including screen, music, and video games. For the first time, professional and business services—accounting, legal, and consultancy—are included in the national industrial plan, recognizing their £300 billion contribution to the economy and growth potential.
Strong Endorsements from Business and Industry Leaders
The strategy has received widespread support from key business groups and industry figures:
- Stephen Phipson CBE, CEO of Make UK, praised the strategy for addressing the skills crisis, high energy costs, and access to capital, calling it a clear message that “Britain is back in business.”
- Tufan Erginbilgic, Rolls-Royce CEO, welcomed the long-term vision supporting aerospace and nuclear industries, emphasizing the company’s readiness to deliver growth and jobs.
- Mike Hawes OBE, SMMT Chief Executive, highlighted the critical importance of implementing the strategy swiftly and addressing energy costs to maintain global competitiveness.
Katherine Bennett CBE, CEO of the High Value Manufacturing Catapult, described the strategy as a pivotal step toward transforming the UK into an industrial powerhouse, underscoring its focus on innovation and skilled job creation.
The UK’s Modern Industrial Strategy represents a decisive shift toward a stable, innovation-driven economy that supports business growth and job creation over the next decade. By cutting energy costs, boosting R&D, and fostering sector-specific development, the government aims to build a resilient industrial base capable of competing on the global stage.
With strong backing from industry and clear government commitment, the strategy sets out a roadmap for a stronger economy that works for working people, positioning the UK as a leading destination for investment and innovation well into the 2030s.
