🇬🇧 UK Sets Out New Industrial Strategy as Questions Grow Over Investment Quality and US Reliability

The Business Secretary used a speech to major business leaders to set out the next phase of the Government's Modern Industrial Strategy, announcing £79 billion in new investment commitments and signalling a shift toward more aggressive economic competition with the United States.

Speaking at Bloomberg's London headquarters to leaders from Alphabet, Meta, Ford, BlackRock and other major firms, the government outlined plans to "go toe to toe" with America on economic growth while "injecting urgency" into industrial policy delivery.

💼 The Core Message: Competing with America

The Government wants the UK to "go toe to toe" with the United States on economic growth. The ambition is simple: faster growth, higher wages, and more investment staying in the UK rather than drifting to the US.

This represents a notable shift in tone from previous industrial strategies, moving from cautious long term planning to aggressive short term growth targeting. The government is explicitly positioning the UK as a rival to American economic dominance, rather than a junior partner.

New Quarterly Performance Data

The government released fresh figures designed to demonstrate early momentum:

👥 New Leadership Appointments

Three senior industry figures are joining the Industrial Strategy Advisory Council that advises the Government on industrial policy:

These appointments signal a focus on energy infrastructure, defence technology, and digital communications as priority sectors for the next phase of industrial development.

⚠️ Why the Type of Investment Matters

Not all investment is equal. Investment in clean energy, advanced manufacturing and tech creates growth. Investment that buys up housing stock and pushes up rents doesn't.

This distinction matters because the Government is celebrating headline investment figures but the quality of that investment determines whether living standards rise or fall.

Productive vs Extractive Investment

A modern industrial strategy should prioritise capital that strengthens the UK's productive base, not capital that treats essential goods like housing as financial instruments. The presence of major asset managers like BlackRock at these events is a reminder that the Government must be clear about which types of investment it wants to attract and which it should discourage.

🔄 Policy Shifts Announced

The government outlined several significant changes to how it approaches industrial policy implementation.

"Injecting Urgency" into Industrial Strategy

The Government says it will:

• Take more risks in sector selection and support
• Place "big bets" on sectors where the UK can win globally
• Accelerate delivery of existing industrial plans
• Streamline decision making processes for major projects
• Reduce consultation periods for strategic investments

This marks a shift from long term planning to short term growth action, reflecting criticism that previous strategies were too cautious and slow to deliver results.

Regulatory Reform Programme

The Government will:

• Accept the Fingleton Review on nuclear regulation streamlining
• Move away from "pointless gold plating" of EU derived regulations
• Reduce administrative burdens on business investment decisions
• Accelerate planning permissions for strategic infrastructure
• Simplify compliance requirements for manufacturing businesses

This is framed as making the UK more competitive and speeding up investment, though critics worry about potential impacts on safety and environmental standards.

Enhanced Financial Support for Scale Ups

Two major financial levers are being expanded:

The goal is to stop promising companies relocating to the US for funding, addressing a persistent drain of UK innovation to American markets.

⚡ Energy & Cost Reduction Measures

The Government highlighted efforts to reduce business operating costs:

• £230 million in reduced admin costs through regulatory streamlining
• Energy price support schemes including the Supercharger programme
• British Industrial Competitiveness Scheme for energy intensive manufacturers
• Planning reform acceleration for renewable energy projects
• Grid connection improvements to reduce energy infrastructure bottlenecks

This forms part of the narrative that the UK is systematically lowering costs for industry, though energy prices remain significantly higher than major competitors.

🌍 International Positioning and Davos Strategy

The announcement sets up the Business Secretary's trip to Davos, where he will pitch the UK as:

• The best place to invest among developed economies
• A hub of entrepreneurship and innovation
• A stable environment for business with predictable policies
• A gateway to global markets through trade agreements
• A partner for long term growth rather than short term extraction

This is about signalling confidence to global investors while positioning the UK as an alternative to both US and EU investment destinations.

High Profile Business Audience

The speech was delivered at Bloomberg's London HQ to leaders from:

Plus representatives from the CBI, British Chambers of Commerce, and Octopus Energy. This is meant to show the Government is engaging with top tier global firms across multiple sectors.

🚨 The Geopolitical Risk: The US Is Not a Predictable Ally

The Government's push to deepen economic ties with the United States comes at a moment when the US is behaving in ways many European governments view as unpredictable and destabilising.

Ukraine Settlement Tensions

Over the past year, the US President has taken a more confrontational tone toward European allies, including the UK and EU. Tensions have risen around competing peace proposals for Ukraine:

• European Position: Favouring settlement that protects Ukrainian sovereignty
• US Approach: Plan prioritising American access to strategic minerals
• Territorial Concerns: US proposals offering Russia concessions without meaningful Ukrainian benefits
• Alliance Strain: Diverging approaches creating friction within NATO
• Economic Implications: Uncertainty affecting long term investment planning

Greenland Annexation Tensions

At the same time, the US has made increasingly aggressive statements about Greenland, a Danish territory and part of the NATO alliance:

While diplomatic negotiations continue, European officials have expressed concern about rhetoric suggesting the US could pursue annexation if talks fail. Any military action against Greenland would create a profound crisis for NATO, given that Denmark is a member and Greenland is part of its realm.

Strategic Dilemma for UK Policy

For the UK, this raises a strategic dilemma:

• Essential Partnership: The US remains a vital economic and security partner
• Volatile Policy: American foreign policy has become more unpredictable and transactional
• European Dismissal: Openly dismissive attitude toward European security concerns
• Investment Risk: Economic alignment carries geopolitical dependency risks
• Alliance Obligations: Potential conflicts between US and NATO commitments

An industrial strategy built around closer alignment with the US must therefore account for the possibility of sudden geopolitical shocks including ones originating from Washington.

🏭 The Long Shadow of Deindustrialisation

For more than four decades, the UK has lived with the consequences of rapid deindustrialisation. From the 1980s onwards, a combination of policy choices and economic pressures made British manufacturing increasingly uncompetitive in both domestic and international markets.

The Structural Transformation (1980s‑2000s)

The result is an economy that relies heavily on imports for goods it once produced, and on services for growth. Many regions that previously depended on manufacturing have faced long‑term unemployment, lower wages, and persistent economic uncertainty.

Contemporary Consequences

The UK's productivity gap is one of the widest in the G7 and is rooted in this period:

• Import Dependency: Goods the UK once manufactured now imported
• Regional Inequality: Former industrial areas facing persistent economic challenges
• Skills Erosion: Loss of manufacturing expertise and technical knowledge
• Supply Chain Weakness: Fragmented domestic supply networks
• Innovation Gap: Reduced connection between research and production

A credible industrial strategy must therefore do more than attract investment, it must rebuild the foundations that were allowed to erode. That means competitive energy prices, long term capital, modern infrastructure, and a workforce with the skills to support advanced manufacturing.

The Cost Competitiveness Challenge

Another factor often highlighted by businesses is the cumulative impact of rising labour costs and taxation:

Over time, governments have tended to prioritise short term tax receipts over long term industrial resilience. When wage floors rise faster than productivity, and when tax burdens increase without parallel investment in competitiveness, manufacturers can find themselves priced out of both domestic and international markets.

This has contributed to a landscape where it is often cheaper to import goods than to produce them in the UK. These pressures don't make industrial decline inevitable, but they do show why rebuilding a competitive manufacturing base requires more than headline investment announcements.

⚡ What a Credible Industrial Recovery Requires

Rebuilding British manufacturing demands addressing the structural issues that caused decline in the first place.

Competitiveness Foundations

Policy Coherence Requirements

A sustained industrial recovery requires:

• Cost Competitiveness: Ensuring UK production costs allow competitive pricing
• Productivity Investment: Technology and training raising output per worker
• Long Term Commitment: Policies maintained across electoral cycles
• Economic Environment: Making production in Britain viable again
• Strategic Patience: Accepting that rebuilding takes decades, not years

It demands a long term commitment to cost competitiveness, productivity growth, and an economic environment where making things in Britain is viable again.

📈 Assessment: Promise vs Reality

The government's announcements contain both encouraging elements and significant gaps that merit careful analysis.

Positive Elements

Critical Gaps

🎯 Conclusion: A Strategy That Faces Forward But Must Reckon With the Past

The Government's renewed industrial strategy signals ambition: faster growth, deeper investment, and a desire to compete with the world's largest economies. The announcements show intent, and the language of "big bets" and "urgency" reflects a recognition that the UK cannot afford another decade of drift.

But ambition alone won't rebuild an industrial base that has been eroded over forty years. The UK's challenges are structural: high energy costs, weak long term investment, fragmented industrial policy, rising input costs, and a workforce still recovering from decades of deindustrialisation. These issues cannot be solved by headline investment figures or short‑term incentives.

They require a sustained, long term commitment to competitiveness, productivity, and rebuilding the foundations of a modern manufacturing economy.

The Geopolitical Context

At the same time, the geopolitical environment is shifting. The United States remains a vital partner, but its foreign policy has become more volatile and more transactional. Building an industrial strategy around closer alignment with Washington carries risks that must be acknowledged and managed.

Economic security and national resilience depend on:

• Diversifying partnerships beyond single ally dependence
• Strengthening domestic capacity to reduce strategic vulnerabilities
• Ensuring balanced exposure to decisions of any single ally
• Maintaining European relationships alongside Atlantic partnerships
• Building strategic autonomy in critical technologies and resources

The Path Forward

The Government's strategy contains promising elements, but its success will depend on whether it can move beyond announcements and tackle the deeper structural issues that have held the UK back for decades.

Reindustrialising Britain is possible, but it demands:

• Consistency: Policies maintained across electoral cycles
• Clarity: Clear priorities and resource allocation
• Courage: Willingness to confront uncomfortable truths about past choices
• Competitiveness: Addressing cost and productivity challenges
• Comprehensive Approach: Beyond financial incentives to structural reform

The next few years will show whether this strategy marks a genuine turning point or another moment of ambition without the follow through. Reindustrialising Britain is possible, but it demands consistency, clarity, and a willingness to confront uncomfortable truths about the choices that led us here.