The UK government has launched a new industrial strategy to enhance the country’s economic security and resilience. The strategy identifies eight key sectors with high growth potential, known as the “IS-8”. These comprise: advanced manufacturing, creative industries, life sciences, clean energy, defence, digital and technologies, financial services, and professional and business services.

The strategy adopts a “more muscular approach to government” for the UK. Historically the UK has been reluctant to invest in industrial development, with the country adopting a laissez-faire approach. Such an approach has governed the UK’s approach to industry since the late 1970s.

Interventionist economy approach

The new strategy involves significant economic intervention. This includes energy subsidies, investment in infrastructure, and a strong focus on developing home-grown technical skills in partnership with the private sector.

A component in developing this strategy has been the “UK Technology Adoption Review”. This highlights that while technology adoption is essential for productivity and growth, the UK lags behind other advanced economies.

The review identifies key barriers to adoption, such as financial constraints, lack of skilled workforce and management, reorganisation costs, information gaps, and policy/regulation uncertainty. The government aims to address these through targeted business support, AI skills development, improved government coordination, and sector-specific initiatives.

Six Frontier Technologies

The UK Government is focusing particularly on six “frontier technologies”. These comprise: Advanced Connectivity Technologies (ACT), Artificial Intelligence (AI), cybersecurity, engineering biology, Quantum technologies, and semiconductors.

The strategy includes direct support of industry, such as subsidising energy bills for businesses, as well as plans to invest in the national grid and redouble efforts to boost home-grown technical skills. The government plans to focus on accelerating growth for the fastest-growing third of the economy, in particular, the IS-8 sectors.

Sector Plans for industrial transformation

The government has outlined a 10-year plan, with each sector having a bespoke Sector Plan, developed with industry. Each Sector Plan will set out a specific vision of the sector’s transformation by 2035.

In Advanced Manufacturing, the government’s ambition is that by 2035, the UK will be “recognised as the best place in the world to start, grow and invest in advanced manufacturing.” It plans to double investment levels across frontier clean energy industries to over £30 billion per year.

The government aims to transform its digital and computing sector, with the UK securing its first trillion-dollar technology business by 2035. And in life sciences, where the UK is already a major global R&D leader, it aims to “drive growth, innovation and better health outcomes”.

Galvanising Defence Infrastructure

The impetus for the UK’s new industrial strategy is not only to transform its industrial sector, but galvanise its defence technology and manufacturing sector, as Europe faces continuing conflict in Ukraine and rising threats from Russia. The strategy states that the “UK will be a defence industrial leader with a strong, innovative and resilient defence industrial base.”

The Six Frontier Technologies identified by the Strategy (Advanced Connectivity Technologies; AI; cybersecurity; engineering biology; Quantum; and semiconductors) were identified not only as having the greatest growth potential for the UK, but also because they “support UK security and sovereignty.”

UK Exascale Computing & AI

AI is seen as a driver of growth, with the government aiming to utilise it to “boost UK productivity by 1.5% a year, worth up to £47 billion a year for the next decade”. The strategy commits £2 billion to an AI Opportunities Action Plan, including £1 billion to scale up the UK’s AI Research Resource capacity by at least 20 times by 2030, and £750 million for a new exascale supercomputer in Edinburgh. A new £500 million “Sovereign AI Unit” will also focus on frontier AI.

The strategy announces a new industry partnership programme, in league with big tech players including Nvidia, Google and Microsoft, to train 7.5 million workers in essential AI skills by 2030.

It will also invest £187 million in digital skills and AI learning for classrooms, including up-skilling 4,000 graduates, researchers, and innovators. A further £100 million will be invested in engineering skills via Skills England. As part of its strategy, the government commits to expand visa programmes and fellowships to allow international workers in the digital and technology areas to come to the UK.

The strategy will increase support for existing expertise in the UK’s regions, such as boosting semiconductor research in Wales and quantum R&D funding in Scotland. It plans to invest £500 million in the “Local Innovation Partnerships Fund” to grow high-potential innovation clusters, with ten regions earmarked across the UK. In particular, the strategy establishes AI Growth Zones to “unlock investment in AI-enabled data centres across the UK by improving access to power and streamline planning.” Culham in Oxfordshire is confirmed as the first site.