UK unveils ambitious 10-year industrial strategy, targeting growth and investment

In a move to reinvigorate the UK economy, the government has released a comprehensive Green Paper outlining its vision for a modern Industrial Strategy. The plan, dubbed “Invest 2035,” aims to drive long-term, sustainable growth by focusing on eight key sectors and addressing regional economic disparities.

At the heart of the strategy are eight “growth-driving” sectors identified as priorities:

1. Advanced Manufacturing
2. Clean Energy Industries
3. Creative Industries
4. Defence
5. Digital and Technologies
6. Financial Services
7. Life Sciences
8. Professional and Business Services

The government’s focus on these sectors signals potential opportunities for increased investment and support. CFOs operating within these industries should be prepared for possible policy interventions aimed at spurring growth and innovation.

Addressing Key Barriers to Growth

• The strategy identifies several critical areas that require attention to unlock business investment and drive growth:
• People and Skills: Recognizing the skills mismatch in the UK economy, the strategy aims to address workforce development and improve the alignment between education and industry needs.
• Innovation: The government plans to accelerate innovation rates and improve the adoption and diffusion of new technologies and processes across sectors.
• Energy and Infrastructure: Acknowledging the importance of reliable and affordable energy, as well as robust infrastructure, the strategy outlines plans to support these crucial enablers of economic growth.
• Regulatory Environment: The government commits to creating a stable and predictable regulatory framework, while also exploring ways to boost competition and market dynamism.
• Crowding in Investment: Efforts will be made to mobilize capital and ensure businesses have sufficient access to finance for growth and expansion.
• International Partnerships and Trade: The strategy emphasizes the importance of international cooperation and aims to expand market access for UK businesses.
• Regional Focus: Unlocking Potential Across the UK

A key objective of the Industrial Strategy is to address regional economic disparities. The government plans to concentrate efforts on high-potential clusters, city regions, and strategic industrial sites across the country. This place-based approach could influence business location decisions and investment strategies in the coming years.

Long-Term Stability and Institutional Support

Toprovide long-term stability and expert guidance, the government plans to establish a statutory Industrial Strategy Council. This independent body will be responsible for monitoring progress, undertaking analysis, and feeding into policy development. For CFOs, this institutional framework could provide valuable insights and a more predictable policy environment for long-term planning.

While specific financial measures are yet to be detailed, the strategy hints at several areas that could impact business finances:

1. R&D Investment: The focus on innovation suggests potential incentives or support for research and development activities.
2. Skills and Training: Businesses may need to allocate more resources to workforce development and training programs.
3. Energy Costs: The strategy acknowledges the need to address high electricity costs for businesses, particularly in energy-intensive industries.
4. Access to Capital: Efforts to improve access to growth capital and scale-up finance could open new funding avenues for businesses.
5. Tax Policy: The government promises a Corporate Tax Roadmap to provide clarity on future tax policies.

Opportunities for Business Engagement

The government emphasizes its commitment to developing the strategy in partnership with businesses, unions, local leaders, and other stakeholders. This collaborative approach presents opportunities for CFOs and business leaders to engage in the policy-making process and potentially shape the final strategy.

The strategy recognizes the transformative power of data in driving innovation and economic growth. It outlines plans to improve data maturity in businesses and leverage public sector data as a driver of growth. CFOs should consider how their organizations can capitalize on these initiatives and may need to evaluate investments in data capabilities.

The government is seeking input on the proposed approach through a series of questions outlined in the Green Paper. The final Industrial Strategy and sector-specific plans are scheduled to be published alongside the Spending Review in Spring 2025.

Implications for CFOs

For CFOs across the UK, this Industrial Strategy presents a mix of opportunities and challenges:

1. Long-term Planning: The 10-year timeframe provides a stable outlook for strategic financial planning.
2. Sector Positioning: CFOs should evaluate their company’s position relative to the eight priority sectors and consider potential alignments or pivot opportunities.
3. Regional Strategies: The focus on regional growth may influence decisions on business locations and expansion plans.
4. Investment Priorities: The strategy’s emphasis on innovation, skills, and digital transformation may require reassessment of investment priorities.
5. Financial Forecasting: Potential changes in energy costs, regulatory environment, and access to finance should be factored into financial forecasts.
6. Government Engagement: CFOs should consider actively engaging in the consultation process to influence policy development.

The UK’s proposed Industrial Strategy represents a significant shift in the government’s approach to economic growth and industrial policy. While many details are yet to be finalized, the strategy provides a clear direction for the UK’s economic priorities over the next decade.

For CFOs, the coming months will be crucial in understanding the full implications of this strategy and positioning their organizations to capitalize on the opportunities it presents. As the government seeks input and refines its plans, business leaders have a unique opportunity to shape the policy landscape that will define the UK’s economic future.

As the strategy develops, CFOs should stay informed, engage with policymakers where possible, and be prepared to adapt their financial strategies to align with the evolving economic landscape. The success of “Invest 2035” will ultimately depend on the effective collaboration between government and business, making the role of financial leaders more critical than ever in driving the UK’s economic growth and competitiveness.

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