Industrial Strategy and Economic Growth
Overview
The Modern Industrial Strategy identifies 8 growth-driving sectors (IS-8). Investment commitments total £72.33bn. The fiscal framework (SR 2025) provides £22.6bn R&D/year by 2029-30. Growth downgraded from 1.5% to 1.0% for 2025 between Budget and Spring Statement.
Departmental positions
| Department | Position | Key commitment |
|---|---|---|
| DBT | Lead; IS-8 policy owner | £72.33bn investment; 50,000+ jobs; 27 home-grown £10bn+ businesses |
| HMT | Fiscal framework; £22.6bn R&D; stability rules | Stability rule met with £15.1bn buffer |
| MOD | Defence as IS-8 sector; “engine for growth” | 2.6% GDP defence; 460,000+ jobs; UKDI |
| DESNZ | Clean Energy Industries as IS-8 | £30bn/year clean energy investment by 2035 |
| DBT/Treasury | British Business Bank (£4bn Industrial Strategy Growth Capital) | Scale-up finance for IS-8 |
Strategic coherence assessment
Coherent in framework, fragile in measurement:
- The IS-8 framework is coherent: Each sector has a 2035 vision and committed investment. The quarterly update mechanism shows government is tracking delivery.
- Measurement fragility: Investment commitments are nominal values at announcement — not realised. The Uniper correction (Q4 2025: £79.28bn → £72.33bn) illustrates the gap between claimed and actual UK-focused investment.
- Clean Energy measurement gap: IS-8’s most important sector for the net zero mission cannot be tracked via SIC codes.
- Skills cross-cutting: All IS-8 sectors need skilled workers. No single model reconciles competing demands.
Key tensions
- skills-shortage-cross-sector — IS-8 sectors compete for same talent pool; no single workforce model
- delivery-confidence-fiscal-ambition — IS investment commitments are announcements; fiscal plans assume efficient delivery
Open questions
- What is the current delivered investment in each IS-8 sector (as opposed to announced)?
- Is the number of £10bn+ home-grown businesses growing?
- How is Skills England coordinating IS-8 workforce needs?