The UK has a real opportunity to harness its industrial strengths to accelerate economic growth with its new Industrial Strategy. Having experienced zero economic growth in July, after a 0.4% rise in June, and the biggest contraction in manufacturing output in a year, the UK has faced persistently slow productivity growth compared with international peers for too long. Can this latest industrial policy become the catalyst for growth?
The overarching mission of the Strategy is to drive long-term, sustainable growth by increasing business investment and supporting priority growth industries. It includes a renewed recognition by the Government that it must tackle the priority challenges facing industry today, notably high energy costs, global competition and persistent skills shortages.
It’s a good mission. But how can the Government build a new relationship with businesses, reignite its industrial engine, and enable UK businesses to compete with the rest of the world?
How we got to the 2025 Industrial Strategy
It is easy to forget that the UK last published an Industrial Strategy in 2017. Abruptly replaced in 2021 after Brexit and the Covid-19 pandemic reshaped the economic landscape, it was never implemented. Despite identifying some of the right challenges, the lack of a unifying mission made it difficult for businesses to prioritise resources and actions effectively. The 2025 Industrial Strategy seeks to redress this.
Industrial policy as a mechanism for economic growth has risen up the agenda in the past few years. In August 2022, the US launched its Inflation Reduction Act (which has subsequently been abandoned), and in February 2025, the EU launched its Clean Industrial Deal and Japan set out industrial policies running to 2040.
This resurgence is largely driven by the need to respond to volatile economic and geopolitical developments, and to address climate and technological changes. Economic and political shocks of the past five years have forced governments to rethink their approach to security, trade, industry, and infrastructure.
How will the UK do it?
The 2025 Industrial Strategy is a 10-year plan that aims to boost investment, productivity and sustainable growth. It wants to raise living standards and provide greater policy certainty for business. Through long-term planning, clearer regulation and faster approvals, it is a departure from the old industrial policy. With eight priority sectors, including advanced manufacturing and clean energy industries, it seeks to redraw the UK as a more modern and agile industrial powerhouse.
Delivery mechanisms include increased funding for R&D and other innovative financing solutions, measures to tackle high energy costs, reformed planning and infrastructure policy, and access to a skilled workforce for growth sectors.
What does the Industrial Strategy mean for Schneider Electric?
The UK’s Industrial Strategy is a step in the right direction. It offers policy clarity, certainty about which sectors the Government will back, and ringfenced funding through the Spending Reviews. The intention to establish the Industrial Strategy Council on a statutory footing is critical to ensure long-term policy certainty. Importantly, net zero and digitalisation are central pillars shaping the overarching vision and the practical delivery.
The IS identifies two important business issues – energy costs and skills gaps – and sets out initial steps to address them. This includes increasing the discount on electricity network charges for energy-intensive industries, who will also be exempted from costs associated with renewable energy policy, such as the Renewables Obligation, Feed-In Tariffs, and the Capacity Market. On skills, there is recognition that the existing apprenticeship levy scheme needs to be reformed and that investment in technical training must be increased. Addressing the UK’s high energy costs and persistent skills gaps is critical for Schneider Electric and our customers.
Another positive feature is the recognition of electricity networks as a ‘foundational sector’ – meaning sectors that provide the essential building blocks and infrastructure for overall industrial and economic growth. The UK’s electricity grid needs to be urgently upgraded for the UK to meet the Government’s target of a decarbonised power system by 2030 and to manage increased demand as more and more sectors electrify.
This is particularly relevant for Schneider Electric UK having just opened a new smart manufacturing plant in Scarborough, which will produce the electrical equipment needed for the UK’s distribution network’s expansion and transport decarbonisation efforts. In retaining our existing workforce, and adding new skilled jobs, the investment is an example of how state-of-the-art, future-focused industries can support communities across the UK.
What needs to happen now and why?
Focus now turns to delivery. Businesses in the UK need urgent support to tackle high energy costs and skills gaps, but the measures set out will take time to implement. As a result, we should look at optimising existing schemes and funding pots.
For example, the flagship Made Smarter programme is a Government-backed initiative designed to help small- and medium-sized manufacturers adopt digital technologies. To date, this £147 million programme has reached over 4,000 manufacturing SMEs, and in 2025, the Government committed up to £99 million in additional funding.
But let’s take it a step further. Tying the Made Smarter scheme to increased uptake of digital technologies has huge potential to directly support decarbonisation, energy efficiency, and energy savings.
Why? The Climate Change Committee sees digital technologies as a key enabler of economic growth. Yes, because of the electrification drive but also because digital technologies strengthen competitive advantage by helping firms improve energy efficiency and reduce their emissions footprint, while using AI to better manage and reduce costs.
Importantly, many of these technologies already exist. We don’t need to spend millions on new pilots. We need to focus on supporting uptake, with policy that incentivises widespread adoption. After all, the cheapest energy is the energy not used.
The Industrial Strategy will succeed if the Government delivers on its promises of sector-specific investment, the delivery of programmes to reduce energy costs, skills development, and planning and regulatory reform. Success will also depend on consistent implementation (with minimal climb-downs), cross-sector collaboration, and maintaining political and economic stability to give businesses the confidence to invest for the long-term.
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