Industrial Strategy quarterly update July to September 2025 (web accessible version)
Updated 31 October 2025
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Quarterly update
Industrial Strategy high-growth sectors (IS-8): economic indicators
Business investment
Figure 1: gross fixed capital formation (billions)
| Quarter | £billions |
|---|---|
| 2024 Q1 | 24.5 |
| 2024 Q2 | 24.5 |
| 2024 Q3 | 25.4 |
| 2024 Q4 | 26 |
| 2025 Q1 | 26.1 |
Source: DBT; ONS business investment (annual gross fixed capital formation and Volume Index Capital Services); 2022 prices.
Gross value added
Figure 2: gross value added (billions)
| Quarter | £billions |
|---|---|
| 2024 Q1 | 184 |
| 2024 Q2 | 186 |
| 2024 Q3 | 186 |
| 2024 Q4 | 186 |
| 2025 Q1 | 187 |
| 2025 Q2 | 189 |
Source: DBT; ONS low-level aggregates; 2022 prices.
Labour markets
Figure 3: employment (millions)
| Quarter | People (millions) |
|---|---|
| 2024 Q1 | 7.24 |
| 2024 Q2 | 7.27 |
| 2024 Q3 | 7.28 |
| 2024 Q4 | 7.29 |
| 2025 Q1 | 7.21 |
| 2025 Q2 | 7.21 |
Source: DBT; ONS Pay As You Earn Real Time Information (HMRC).
Productivity
Figure 4: output per worker (thousands)
| Quarter | Output per worker (thousands) |
|---|---|
| 2024 Q1 | 21.5 |
| 2024 Q2 | 21.7 |
| 2024 Q3 | 2.8 |
| 2024 Q4 | 21.7 |
| 2025 Q1 | 21.9 |
| 2025 Q2 | 22.1 |
Source: DBT; ONS low-level aggregates and productivity jobs; 2022 prices.
Quarterly estimates are derived from annual ONS data of the whole economy. Revisions can occur when official statistics are published.
Last quarter (Q3, July to September 2025)
- over £250 billion investment commitments made into IS-8
- over 45,000 jobs from investment commitments made into IS-8
- equal-first investment location globally (Deloitte CFO Survey)
- over £5 billion public finance support for UK businesses to scale and export
See the methodology note for further details on how these figures were calculated.
Delivery milestones for Q3 (July to September 2025)
Publication of final 3 Industrial Strategy sector plans (for Defence, Financial Services and Life Sciences). Each IS-8 sector now has a dedicated plan setting out a 10-year vision for growth.
UK-US Technology Prosperity Deal with £150 billion of investment by US companies creating about 7,600 jobs, and a new UK-US Nuclear Partnership agreed that should unlock further investment and jobs.
Temporary Shortage List takes effect, exempting key IS-8 occupations from Skilled Worker Visa changes, including lab technicians, data analysts, vehicle mechanics and electricians.
Consultation to reduce electricity costs for Energy Intensive Industries completed, paving way for increasing compensation for the network charges paid by eligible business from 60% to 90% from April 2026.
Delivery forward look for Q4 (October to December 2025)
Launch of Connections Accelerator Service to support priority demand projects connecting to the electricity grid, including those which prioritise high quality jobs and consultation to reduce electricity prices for eligible businesses through the British Industrial Competitiveness Scheme.
UK Research and Innovation’s budget will be allocated to 2029/30, setting out long-term support for the IS. Government R&D investment will be more than £86 billion over the Spending Review period.
Plans to upskill industries and train up new workers set out in the Post-16 education and skills white paper, with first sector workforce strategy published for energy.
The current administrative burden imposed by regulation will be baselined, and those costs will be reduced by 25%. This, alongside other key metrics, will be included in future updates.
Delivery updates across the IS-8 sectors
Advanced Manufacturing
- DRIVE35 programme launched providing £2.5 billion capital and R&D funding for auto sector
- launch of £650 million electric vehicle grant scheme with discounts of up to £3,750 per vehicle to increase consumer demand
- a total of £70 million of R&D funding for over 50 innovative auto projects. Latest round of the aero R&D competition selected 18 projects worth £190 million
Clean Energy Industries
- Contracts for Difference Allocation Round 7 open, including £544 million Clean Industry Bonus
- a total of 10 projects from Hydrogen Allocation Round 1 approved, with more than 700 jobs; 2 new CCUS projects join HyNet cluster, supporting 2,800 jobs across North Wales and North West
- UK-US Advanced Nuclear Partnership, including proposals to build nuclear plants. X-Energy and Centrica plan up to 12 advanced modular reactors in Hartlepool
Creative Industries
- allocations of £150 million Creative Places Growth Fund confirmed for West Midlands, West of England, West Yorkshire, North East, Liverpool City Region and Greater Manchester, with £25 million going to each Mayoral Strategic Authority
- new creative higher technical qualifications rolled out, and a new Creative Sector Skills Forum, building training pathways
- industry agreement on fair remuneration principles for creators and music streaming. Funding announced to co-develop a Creative Content Exchange, a trusted marketplace for selling, buying, licensing and permitting access to digitised cultural and creative assets
Defence
- £182 million Defence Skills package with 5 Defence Technical Excellence Colleges for a high-skilled workforce
- £220 million to transform Defence test & evaluation, deliver the Defence Tech Scaler and establish the Defence Energy and Capability Resilience Centre of Excellence
- £65 million to boost smaller businesses and exporters through the Defence Office for Small Business Growth and Office for Defence Exports
Digital and Technologies
- new AI Growth Zone in the North East – with potential for more than 5,000 jobs leveraging £30 billion in private investment
- UK-US Technology Prosperity Deal to facilitate collaboration in strategic science and tech, including AI and quantum
- Compute Roadmap and Cyber Growth Action Plan to advance job creation and innovation
Financial Services
- Office for Investment concierge service for financial services firms established
- Launch of consultation on the consolidation of the Payment Systems Regulator into the Financial Conduct Authority which has completed its review into the Consumer Duty on wholesale firms
- established Transatlantic Taskforce for Markets of the Future with US, enhancing collaboration on capital markets, digital assets and other innovative financial activities
Life Sciences
- Moderna launched new Innovation and Technology Centre to manufacture cutting-edge mRNA vaccines as part of £1 billion 10-year strategic partnership with government
- Europe’s first Biofoundry for mRNA manufacturing established in Darlington, with over £29 million government funding, to springboard new RNA therapies which could help tackle cancer, heart conditions, and other diseases
- £50 million Life Sciences Transformational R&D Investment Fund Pilot to support large-scale, capital-intensive projects in the sector worth over £100 million
Professional and Business Services
- Made Smarter Professional Business Services delivery model being developed with Mayoral Strategic Authorities for 2026 roll out
- ‘Made in the UK, Sold to the World’ roadshow in Edinburgh, bringing together small businesses, industry experts and trade bodies with government to fast-track firms’ global growth
- a new specialist panel of experts will be launched to promote English law as a premium export, supported by independent research on English law’s commercial value and economic benefit to the UK
Business environment reforms
Reducing regulatory burdens and speeding innovation
Reform to planning and permitting, publishing regulator KPIs, and simplifying regulatory landscape in the financial and water sectors.
Enhancing skills
Applications for 350 undergraduates to grow the UK tech skills pipeline; 10 Construction Technical Excellence Colleges announced across England, with £100 million to train 40,000 people by 2029.
Increasing access to talent
A total of 12 universities and research institutes selected to deliver £54 million Global Talent Fund to recruit the world’s top researchers to IS-8 sectors.
Driving innovation
Launch of Clean Energy: 2GW Peak Time Flexibility challenge – the first of 6 R&D Missions Accelerator programmes – using AI and digital tech to cut peak demand for grid electricity.
Using government’s purchasing power
Consultation concluded on public procurement reforms to grow British industry, jobs and skills.
Delivering for UK exporters
The new Ricardo Fund has assigned funding to over 130 projects; this will remove obstacles for UK businesses selling abroad, tackle complex regulatory issues, and shape global standards.
Making it easier for business to navigate government
Business Growth Service launched – Business.gov.uk – to access government-backed advice and support services.
Backing transformational infrastructure projects
Infrastructure Pipeline published and Gatwick Airport’s £2.2 billion second runway application approved, supporting an estimated 14,000 new jobs and over £1 billion for the regional economy.
Mobilising private capital
About £28 billion in infrastructure financing raised between January and August, including M&A, with the UK on track to raise a record of more than £42 billion by end of the year.
Capitalising on the value of UK data
Launch of new schemes to empower consumers, generate innovation and support productivity gains across IS-8 sectors – with focus on opportunities for Smart Data in energy and digital markets following recent calls for evidence.
Expanding access to finance, including support for scale-ups
Public finance institutions made available more than £5 billion to large projects, finance to small businesses and scale ups, and support for exporters. Coordination has been strengthened through a quarterly Strategic Public Investment Forum, which met for the first time in September 2025.
Examples of public finance support (July to September 2025)
| Investor | Company | Project | Value (£million) |
|---|---|---|---|
| British Business Bank | NRG Therapeutics | Support to accelerate treatments for neurodegenerative diseases | 8 |
| British Business Bank | Cyted Health | Support for expansion of early cancer detection technologies | 5 |
| British Business Bank | Salica Investments | Has raised £150 million to provide debt to high-growth companies with a regional focus across the UK in software, IP-rich hardware and advanced manufacturing sectors | 30 |
| British Business Bank | Blueskytec | South West Investment Fund support to scale cybersecurity hardware for critical national infrastructure projects | 1.5 |
| National Wealth Fund | Fidra Energy | Equity investment as part of £1 billion capital raise to fund the construction of battery storage facility at Thorpe Marsh, South Yorkshire | 200 |
| National Wealth Fund | Eelpower | Equity commitment alongside Equitix and Aware Super to invest £500 million in a new UK battery storage platform, Eelpower Energy | 200 |
| UK Export Finance | Jaguar Land Rover | Export Development Guarantee to bank expected to enable loan facility to support its supply chain following a recent cyber-attack | 1,500 |
| UK Export Finance | Ford | UK Export Finance enabled finance support for global transformation and manufacture of smart, connected and electrified vehicles | 1,000 |
| UK Export Finance | SRT Marine Systems | Finance provided to SRT buyers to secure export contracts for advanced maritime surveillance systems to coastguards in Indonesia and Kuwait | 305 |
UK-wide delivery
Local Growth Plans
Plans published by South Yorkshire, West of England and West Midlands over the last quarter, setting out an economic vision for each region aligned to the Industrial Strategy.
Local Innovation Partnerships Fund
At least £30 million earmarked for each of Cardiff Capital Region, Glasgow City Region and an innovation corridor linking Belfast with Derry/Londonderry. This builds on funding for 7 places in England, ahead of a wider competition for support on high potential innovation clusters that meet local priorities and national objectives.
AI Growth Zones
North East confirmed as the location of the second AI Growth Zone, including Blyth in Northumberland and Cobalt Park in North Tyneside, creating potential for 5,000 jobs and billions in private investment.
Defence Growth Deals in Plymouth, South Yorkshire, Scotland, Wales and Northern Ireland launched
The deals are backed by £250 million in funding to boost priority sub-sectors and leverage investment.
A £1.6 billion missile deal for Ukraine supported by UK Export Finance coming into effect
Five thousand air defence missiles to be manufactured by Thales in Belfast, creating 200 jobs.
Industrial Strategy Zones
Port of Tyne’s £150 million 230-acre (93 hectare) redevelopment project with new deep-water quayside will create potential for 12,000 jobs in Advanced Manufacturing and Clean Energy Industries.
New towns
The next generation of new towns across England will be progressed following publication of the New Towns Taskforce’s report – 12 locations have been recommended, aligned to areas of Industrial Strategy strength and growth potential.
Public finance support case study: Cyted Health
Cyted Health is a leading gastrointestinal molecular diagnostics company based in Cambridge. It is pioneering the development of minimally invasive cell collection, coupled with proprietary biomarker discovery, to transform the detection of pre-cancerous, cancerous and inflammatory esophageal conditions.
The British Business Bank has invested £5 million into Cyted, as part of a £32.5 million Series B funding round.
Cyted’s technology has already demonstrated significant success across the National Health Service. It has completed over 35,000 tests and is building a robust portfolio of peer-reviewed publications, showing a high level of patient acceptability and real-world clinical impact.
Marcel Gehrung, CEO and co-founder of Cyted Health said: “This investment will help us consolidate our leading position in the market by expanding our US presence and adding new life-saving innovations to our advanced diagnostics portfolio.”
International markets
United States
UK-US Technology Prosperity Deal and UK-US nuclear partnership agreed, collaborating on priority frontier industries including AI, quantum, cloud infrastructure, biotech, precision medicine, fusion energy and nuclear technologies.
Japan
UK-Japan Industrial Strategy Partnership formalised and first tranche of activities announced, focusing on cooperation in advanced manufacturing, clean energy industries, life sciences, quantum and cyber.
Both governments committed to exploring further collaboration, including on space and defence.
China
Significant ministerial trade talks held for first time in 7 years, delivering over £1 billion of market access wins over 5 years including in Industrial Strategy priority sectors.
India
UK-India Trade deal – India’s most comprehensive with any country to date – is forecast to boost bilateral trade by £25.5 billion annually. It includes reducing tariffs on advanced manufacturing and med-tech exports, and facilitating market access for clean energy industries and professional and business services.
Saudi Arabia
New partnership and over £360 million UK-Saudi investment to generate more than 180 jobs announced at the GREAT FUTURES Summit in London. A joint agreement, based on priorities within Vision 2030 and the Industrial Strategy, will boost trade and investment in key sectors including financial services, life sciences, clean energy industries, and creative industries.
France
More than £1 billion worth of investment deals into the UK announced at UK-France Summit, alongside a new Industrial Strategy Partnership. This sets out cooperation in AI, clean energy industries and advanced manufacturing to build mutual growth, drive bilateral investment and improve resilience.
Norway
Major frigate deal signed worth £10 billion – supporting over 4,000 UK jobs including 2,000 in Scotland, and 432 businesses in the supply chain, alongside progress towards UK-Norway defence agreement.
Major new investment commitments
Industrial Strategy sectors are actively supporting investment into the UK economy, including:
| IS-8 Sector | Investor | Project | Value (£million) | Jobs |
|---|---|---|---|---|
| Cross-sector | Blackstone | Pan-sector, 10-year commitment, including AI and data centres | 100,000 | Not public |
| Advanced Manufacturing | Walsin Lihwa | Superalloy forging facility focused on producing speciality steel and nickel parts | TBC | 200 |
| Clean Energy Industries | EDF, Centrica, La Caisse, Amber Infrastructure | Sizewell C nuclear power plant, supported by National Wealth Fund | 38,000 | 10,000 |
| Clean Energy Industries | Iberdrola | Investment in transmission and distribution electricity networks over next 3 years | 17,500 | 8,000 |
| Clean Energy Industries | Sumitomo | 10-year commitment to key UK infrastructure and clean energy projects | 7,500 | Not public |
| Creative Industries | Sky Group | Expansion of film and TV studios in Sky Studios Elstree, with 10 new stages | 2,000 | 2,000 |
| Defence | Norwegian Government | 5 Type-26 frigates purchased from British shipbuilders, led by BAE Systems | 10,000 | 4,000 |
| Defence | Palantir | Defence innovation through AI-powered capabilities, includes making UK its European HQ | 1,500 | 350 |
| Digital and Technologies | Amazon | Includes 4 new fulfilment centres in Hull, Northampton, and the East Midlands | 32,000 | >4,000 |
| Digital and Technologies | Microsoft | AI infrastructure and operations across the UK | 22,000 | Not public |
| Digital and Technologies | Alphabet | Capital expenditure, R&D, and related engineering over the next 2 years | 5,000 | 8,250 |
| Digital and Technologies | Salesforce | Ongoing operations and establishing the UK as its European AI hub, backed by R&D teams | 1,400 | Not public |
| Digital and Technologies | AI Pathfinder | Delivering AI compute capacity beginning in Northamptonshire | 1,000 | Not public |
| Life Sciences | Prologis | Strengthen existing investments including Cambridge Biomedical Campus | 3,900 | Not public |
| Life Sciences | Convatec | New R&D hub in Manchester, as part of a broader $1 billion investment in the UK and US over next decade | 500 | Not public |
| Financial Services | Revolut | Expansion of UK operations including new global headquarters in London | 3,000 | 2,000 |
| Financial Services | Shinhan Bank | Commitment to the UK’s Financial Services sector including expanding London office | 2,000 | Not public |
| Financial Services | PayPal, Bank of America, Citi Bank, and S&P | Investments in Edinburgh, Belfast, Manchester and London | 1,250 | Not public |