Set to be published alongside the Spending Review later this spring, the government’s Invest 2035 Modern Industrial Strategy marks a serious effort to reshape Britain’s economy for long-term growth.
Initial impressions are promising; it is a seemingly pragmatic, sector-focused plan that steers clear of the common pitfalls of past industrial strategies. These notably include a lack of prioritisation which has historically diluted impact and a short-term outlook leading to plans being abandoned before delivering results.
While the framework provides a promising direction, it now faces its greatest challenge: execution.
Industrial strategy is no longer a fringe idea in UK policymaking. Since the 2008 financial crisis, the largely ‘hands-off’ market-driven model has gradually given way to a more direct approach. Governments across the political spectrum now recognise the need for active economic planning to drive sustainable growth. Invest 2035 is the latest - and arguably most structured - attempt at this.
The strategy focuses on eight priority sectors: advanced manufacturing, clean energy industries, creative industries, defence, digital and technologies, financial services, life sciences, and professional and business services.
These choices hold few surprises. Indeed, most economists would have selected similar industries given their growth potential, global competitiveness, and importance to the UK economy. Interestingly, a stronger emphasis on services (particularly financial services) reflects a shift from viewing the sector as a systemic risk to more of an economic enabler.
A sure strength of Invest 2035 is its sectoral focus. Unlike past strategies that were inherently vague or attempted to be all-encompassing, this plan sets defined priorities that are much more likely to help businesses and investors align their strategies accordingly.
The government’s commitment to addressing essential foundational issues such as skills, infrastructure, regulatory reform, and investment attraction also signals a mature understanding of economic growth beyond subsidies or direct intervention. However, it has to be said that the strategy’s greatest challenge is its sheer breadth.
With eight sectors, multiple sub-sectors, and at least a dozen intervention methods, the analytical task ahead is a daunting one. The government must now prioritise and narrow the scope of its focus - a difficult but necessary step given the constraints of the upcoming Spending Review. A lack of focus risks diluting impact, spreading resources too thinly, and leaving businesses uncertain about where government support will truly materialise.
Another missing element is the acknowledgement of trade-offs. The strategy promises to balance growth, net zero, economic resilience, and regional rebalancing, but these goals do not always align. Strengthening domestic manufacturing, for instance, may come at the cost of higher consumer prices. Similarly, decarbonisation requires an upfront investment that may not yield immediate economic returns. Recognising these tensions, and being transparent about how they will be managed, would go a long way towards enhancing the strategy’s long-term credibility - and indeed viability.
For businesses and investors alike, the key takeaway is this: Invest 2035 is a serious, structured attempt to reshape the UK economy, but its real impact will depend on the next phase of decision-making - which we’ll see start to gear up after its official release alongside the spring Spending Review.
At its core, Invest 2035 promises to be the most coherent industrial strategy the UK has seen to date. It avoids grandiose promises and takes a decidedly more pragmatic approach to economic planning. However, the hard work is just beginning. To delve into the strategy in depth ahead of its release, explore the government’s (now closed) consultation document.
As the government refines its focus, staying ahead of policy shifts will be crucial; get in touch with our expert team for help navigating the impact on your sector.
