UK industrial strategy targets energy costs, R&D and finance access to spur growth

The UK government has unveiled a sweeping new industrial strategy aimed at revitalising the British economy through targeted investment, innovation, and a more active role for the state in shaping long-term growth.

Described as a “modern industrial strategy,” the plan sets out a 10-point “growth mission” centred on strengthening Britain’s global competitiveness, supporting businesses, and delivering secure and sustainable economic growth.

The strategy targets eight high-potential sectors, including advanced manufacturing, creative industries, clean energy, defence, life sciences, digital technologies, professional services, and financial services.

At the heart of the government’s message is a commitment to restoring business confidence and reversing what it calls a loss of national economic dynamism in the face of global instability and rising competition.

A response to a changing world

In a statement accompanying the strategy, ministers acknowledged that “the pace and magnitude of global change have escalated,” exposing vulnerabilities in supply chains and leaving British workers to bear the brunt of economic pressures, including the cost-of-living crisis.

The government now wants to position the UK as a stable, reliable place for investment.

“Business-as-usual will not work,” the statement said.

“We need a new relationship between business and government, where government provides the strategic certainty that allows businesses to do what they do best: create wealth.”

To that end, the strategy promises a more “muscular” and agile approach from the state, including reducing regulatory burdens, treating UK data as an economic asset, and fast-tracking critical planning decisions.

Key areas of focus

The strategy outlines ten core pillars aimed at revitalising the UK economy.

Among the top priorities is tackling high industrial electricity costs by slashing green levies on businesses and investing in the electricity grid to improve access and reliability.

A significant push is being made to drive innovation, with the government committing £86 billion towards research and development across key sectors.

Expanding access to finance also features prominently, with plans to provide the British Business Bank with additional capital and broaden the mandate of the National Wealth Fund.

To address labour market challenges, the government aims to reform the skills and employment support system in order to create a steady pipeline of skilled workers.

On the international front, the strategy emphasises promoting fair trade and securing new global partnerships, with a pragmatic approach to navigating geopolitical uncertainty.

In terms of fiscal policy, the government has pledged to ensure that the tax system better supports high-growth sectors.

Lastly, ministers are promising to cut red tape, with the goal of reducing the administrative burden of regulation for businesses by 25%.

Response from industry leaders

The inclusion of Professional and Business Services as a priority sector has been welcomed by the Recruitment and Employment Confederation (REC).

Neil Carberry, the REC’s chief executive, said the strategy could lay the foundation for meaningful investment and productivity gains.

“This Industrial Strategy is an important chance to finally make progress on this over the long term, forming a new partnership between business and government,” said Carberry.

“The test now is whether the strategy can be delivered... not just by the Department for Business, but at the core of all government policy.”

Not all sectors, however, are pleased.

The hospitality industry, which employs more than seven million people across the UK, has expressed disappointment at being left out of the growth plan.

Kate Nicholls, chief executive of UKHospitality, said:

Nicholls warned that without targeted support for hospitality and the high street, the government risks reinforcing regional inequalities and missing an opportunity to support a significant portion of the workforce.

A re-evaluation of the state’s role

Alongside its vision for future growth, the strategy offers a frank assessment of the UK state’s historical shortcomings.

It argues that Britain has often been “both overbearing and feeble,” with too much bureaucracy to seize new opportunities and too little intervention when communities needed support.

“The result is a state that is... poorly serving an economy that has become too reliant on one place, too exposed to global volatility and too sluggish to take advantage of transitions,” the document says.