‘Invest 2035: The UK’s Modern Industrial Strategy’: An Analysis

Yesterday, the Government released their Industrial Strategy Green Paper, timing it with the International Investment Summit.

An industrial strategy shapes how governments actively direct the structure of the economy to achieve their desired objectives. In the case of this Government, the primary objective is to achieve higher growth while also prioritising key goals including decarbonisation, economic resilience, and regional rebalancing.?

‘Invest 2035: The UK’s Modern Industrial Strategy’ provides the first insight into the Labour government’s “pro-business, pro-growth” framework. Here’s our take on what stands out:?

Growth, growth, and more growth

This word alone is peppered 276 times throughout the document, leaving no room for guesswork on what the government is focused on. The green paper makes it clear that attaining higher levels of growth and boosting productivity requires an investment-intensive economy.

Given that Starmer reaffirmed his commitment to making the UK the fastest growing economy in the G7, this is expected. The green paper equally promotes a stable and calm environment to incentivise investment, promoting ‘long-termism’, and distancing itself from the chop-and-change of the past few years. This will be trumped by the government to attract secure, sustainable investment and growth. After all, investments are made in anticipation of future returns which renders the predictability of the policy environment very important. In an increasingly turbulent world, UK public policy should avoid increasing uncertainty.?

Identified Sectors

The compartmentalisation of the strategy into eight different sectors, each identified as promoters of growth and investment, is a welcome and pragmatic change which will enable a targeted approach by the government. The eight sectors are the following:?

●? ? ? Advanced Manufacturing

●? ? ? Clean Energy Industries

●? ? ? Creative Industries

●? ? ? Defence, Digital and Technologies

●? ? ? Financial Services

●? ? ? Life Sciences

●? ? ? Professional Services

●? ? ? Business Services?

In the next stage of development of the Industrial Strategy, the Government has mentioned that it will prioritise sub-sectors within these eight broad sectors. In a nod to Greg Clark’s work on the same topic nearly a decade ago, the government has said it will develop ambitious and targeted Sector Plans in partnership with business, devolved governments, regions, experts, and other stakeholders, through bespoke arrangements tailored to each sector.

The inclusion of creative industries comes as a welcome addition after the hammering that the sector has taken after the pandemic. Capitalising on the wealth of export value that our creative industries wield is a smart move and one which will be welcomed by the industry.?

The role of regulation was reiterated by Starmer at his speech, who recognised that in certain contexts, it currently was “needlessly” hindering the “investment we need to take our country forward”. Nonetheless, it remains to be seen as to how this rhetoric interacts with, for example, increased regulations set out by the Employment Rights Bill.

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Place-based Growth

Echoing the sentiment of the previous Government’s ‘Levelling Up’ agenda, the Government has clearly taken a segmented approach to their Industrial Strategy. Introducing both a sectoral-based and place-based approach to their strategy provides greater scope for the government to tailor their strategies to investors, enhancing the possibility for cross-departmental growth strategies.?

Utilising Local Growth Plans, locally owned 10-year strategies, as a cornerstone of this place-based approach fits in line with the government’s plans to increase the remit and responsibilities of Local Authorities. No doubt the English Devolution Bill announced at the King’s Speech will have a part to play in conferring these greater responsibilities.

Next Steps

The Government plans to hold focused roundtables and conversations across the UK between now and Spring and have opened a public consultation which is open for submissions until the 24th November to help further advise and build on the framework set out in the paper. The response to the Green Paper will be included in the final Industrial Strategy and growth-driving Sector Plans, to be published alongside the Spending Review in Spring 2025. No doubt the government will be working behind the scenes to rouse industry support and consult with a variety of stakeholders to maximise the potential of the strategy.??

Conclusion

All in all, this is a promising strategy which seeks to boost growth across the UK. The Strategy provides a comprehensive framework that puts meat to the bone of Labour’s much-touted ‘growth mission’; with the Budget fast approaching, the Government now feels on the front foot of policy momentum that should give greater confidence to investors, businesses and consumers alike.

Zehra Sami & William Taylor are Analysts at WPI Strategy.