UK Modern Industrial Strategy 2025
Overview
Published 23 June 2025 by DBT (last updated 4 March 2026). A 10-year strategic plan to significantly increase business investment in 8 growth-driving sectors by streamlining investment processes and providing regulatory certainty. Eight sector plans accompany the main strategy, each with 2035 visions.
Strategic intent
Problem: UK business investment in high-growth sectors has lagged international comparators. Regulatory uncertainty and fragmented support have inhibited scale-up.
Theory of change: Government as co-investor and certainty-provider → unlocks private sector investment in IS-8 sectors → productivity and GVA gains → jobs and economic resilience.
The 8 growth-driving sectors (IS-8)
| Sector | 2035 Vision |
|---|---|
| Advanced Manufacturing | Best place globally to start, grow, invest by 2035 |
| Clean Energy Industries | Double investment to exceed £30bn/year by 2035 |
| Creative Industries | UK as global creative powerhouse; £124bn economy now |
| Defence | UK as defence industrial leader; “engine for UK economic growth” |
| Digital and Technologies | Top 3 globally for creating/scaling tech; UK’s first $1 trillion tech business |
| Financial Services | World’s most innovative full-service financial centre by 2035 |
| Life Sciences | World-class R&D; outstanding location for scaling; NHS modernisation |
| Professional and Business Services | Most trusted global adviser; world’s second-largest PBS exporter |
Key figures
- £72.33bn investment commitments (corrected Q4 2025 from £79.28bn — Uniper’s £6.95bn removed as it related to European not UK markets)
- 50,000+ jobs from investment commitments
- £9bn UKRI funding allocated to IS-8 sectors
- £4bn Industrial Strategy Growth Capital via British Business Bank
- 27 home-grown businesses (UK-founded, UK-HQ, no foreign parent, >£10bn valuation) as of December 2025
Defence sector plan
Published 8 September 2025. Backed by the largest sustained increase in defence spending since the Cold War (2.6% GDP by 2027; 3% ambition next Parliament). Six priority outcomes:
- Making defence an engine for growth
- Backing UK-based businesses (SME access, offset policy for overseas contracts)
- Leading edge of defence innovation (UKDI; AI, autonomy, quantum, space)
- Resilient UK industrial base (sovereignty, supply chain)
- Fixing defence procurement (National Armaments Director created; 50+ years’ biggest shakeup)
- Forging new partnerships
Defence Nuclear Enterprise: 3,000+ supply chain businesses; workforce demand growing from 48,000 now to ~65,000 by 2030.
Defence Growth Deals: £250m new investment. Office of Defence Exports created — goal of becoming Europe’s leading defence exporter.
Measurement framework (IS Economic Indicators)
Six tracked indicators: business investment, GVA, exports, number of home-grown large businesses, labour market outcomes, productivity.
Key limitation: “Figures represent the nominal value over the lifetime of each investment and reflect the position at the point of announcement, rather than when the investment occurs or jobs are created.” Investment commitments are announcements, not delivered outcomes.
Note: Clean Energy Industries “cannot be proxied at all under the SIC system” — a significant measurement gap for a core IS-8 sector.
Quarterly delivery updates
- Q3 2025 (July–September): IS “proceeding at pace”; full figures in PDF — limited public detail available
- Q4 2025 (October–December): Investment total corrected downward from £79.28bn to £72.33bn due to Uniper error (European, not UK investment). April 2026 correction note published.
The correction raises a data quality flag: investment commitments claimed as UK-facing were not UK-facing.
Assumptions and risks
- Investment commitments are at announcement value, not at delivery — standard lag between announcement and economic impact is significant
- Defence sector plan depends on sustained spending at 2.6% GDP — itself dependent on fiscal headroom and political continuity
- Life Sciences sector plan explicitly linked to NHS 10-Year Health Plan — creates dependency on NHS reform delivery
- Clean Energy Industries measurement gap means IS-8 progress in this sector cannot be tracked via standard ONS data
- Skills shortages are cross-cutting across IS-8 sectors — no single resolution mechanism (see skills-shortage-cross-sector)
Tensions flagged
- skills-shortage-cross-sector — IS-8 sectors compete for the same construction, engineering, and technology workers needed simultaneously for clean power, defence, life sciences, and digital
- delivery-confidence-fiscal-ambition — IS investment commitments are announcements; the data correction (Uniper) indicates measurement unreliability
- defence-oda-funding — Defence sector plan relies on 2.6% GDP spending, funded partly by ODA cuts
Source files
raw/industrial-strategy/industrial-strategy-2025.mdraw/industrial-strategy/sector-plans-overview.mdraw/industrial-strategy/sector-plan-defence.mdraw/industrial-strategy/is-quarterly-update-q3-2025.mdraw/industrial-strategy/is-quarterly-update-q4-2025.mdraw/industrial-strategy/is-economic-indicators-methodology.md