Aiming to ‘help [the country] seize the most significant opportunities and create the most favourable conditions in key UK sectors, the strategy outlines a number of new policy measures ranging from lowering energy prices to improving grid connectivity.
The Government has identified eight key sectors – the IS-8 – with the ‘highest potential’ for economic growth and which will receive the majority of its support as a result. These sectors are: advanced manufacturing, clean energy, defence, digital and technology, the creative industries, life sciences, financial services, and professional services such as accounting and the legal profession.
Businesses will receive support in the form of increased investment, trade support, skills training, lower energy prices, and improved access to future talent, for example, with the Government set to spend over £170bn in total across its pipelined projects.
Key Policies
The Government has committed to cutting energy costs for big electricity users, by introducing a ‘British industrial competitiveness scheme’ from 2027 onwards. The scheme is set to cut costs by up to £40 per megawatt-hour, and could benefit over 7,000 businesses, the Labour party said.
The strategy will make energy-intensive manufacturers exempt from levies like the Renewables Obligation, feed-in tariffs and the capacity market, and will also grant their industries a 90 per cent discount – up from 60 per cent – for other policy costs that currently help to fund the UK’s electricity network.
In response to many businesses not being able to access grid connections in the first place, the Government will introduce a ‘connections accelerator service’ by the end of 2025, to reduce queuing times for projects that could enhance economic growth or create new jobs.
Looking to increase exports, the Government also highlighted its plan to align its strategy with Japan, its talks with the Arab states of the Persian Gulf, South Korea, Switzerland and Turkey, and the ways to strengthen relations with France and Germany. IS-8 firms will receive overseas investment support, with special ambassadors created in key markets.
For SMEs, the British Business Bank’s capacity will be expanded to increase investment, and an extra £1.2bn a year will be spent on skills by 2028-2029. A further £2.6bn has been committed to support entrepreneurs across the UK, with the aim to address regional funding gaps and support local innovation clusters. The defence industry is also set to receive a budget of £400m for ‘novel technologies’ via its new representative body, UK Defence Innovation – though a separate ‘defence industrial strategy’ has not yet been published.
Industry Response
Reacting to the publication of the UK’s Modern Industrial Strategy, Stephen Phipson, CEO of Make UK, said: “Today is one of the most important days for British industry in a generation. In launching the Industrial Strategy white paper, Jonathan Reynolds has demonstrated the Government’s commitment to honour its promises and tackle the major structural problems that have blighted UK manufacturing for so long.
“Make UK has led the campaign for a new Industrial Strategy for many years, highlighting the three major challenges that were diminishing our competitiveness, hampering growth and frustrating productivity gains: a skills crisis, crippling energy costs and, an inability to access capital for new British innovators.
“The Government has listened and the Secretary of State has acted decisively with a joined up strategy which reflects a wider commitment from the Prime Minister and Cabinet alike. The strategy sets out comprehensive and well-funded plans to address all three of these structural failings. Clearly there is much to do as we move towards implementation but, this will send a message around the world that Britain is back in business.”
Donna Edwards, Programme Director for Made Smarter North West, added: “This is a landmark moment for SME manufacturing. The Government’s commitment to expand the Made Smarter Adoption Programme as part of the Advanced Manufacturing Sector Deal is a powerful recognition of the critical role our makers play in driving innovation, growth and sustainability.
"Launched here in the North West in 2019, Made Smarter has helped thousands of SMEs start their digital journey – providing expert technology advice, leadership and skills training, and funding for internships and digital projects.
“The new £99m commitment, highlighted in the Industrial Strategy, gives us optimism for the future. While we await further detail on the proposals, this announcement is a huge vote of confidence in SME manufacturing and the impact of Made Smarter. It gives businesses the confidence to invest in technology, people and long-term transformation.”
Urging the UK industry to not just wait for the 2027 energy cuts but to ‘act now’ by leveraging readily-available technology, Barbara Frei, Executive Vice President, Industrial Automation at Schneider Electric said: “As global energy prices remain volatile, industrial firms face mounting pressure to protect margins. But the solution isn’t simply to wait for prices to fall. The real opportunity lies in redefining cost competitiveness through smarter resource management and automation.
“To stay globally competitive, the UK’s industrial companies must go beyond traditional cost-cutting. They need to embrace open software-defined automation and industrial AI. Not as future investments, but as immediate strategic imperatives. These technologies are already delivering measurable gains in productivity, efficiency and emissions reduction across global markets.
The UK government must use the Industrial Strategy to incentivise investment in smart factories, robotics R&D and workforce reskilling. Public-private partnerships, targeted incentives and streamlined regulation will be essential to accelerate adoption, especially among SMEs. Industrial Sustainability is no longer a side initiative; it needs to be the cornerstone of industrial strategy. Embedding circularity, decarbonisation and resource efficiency into operations builds resilience and long-term value and software-defined automation is the catalyst that makes this transformation scalable and actionable.”
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