Industrial Strategy quarterly update October to December 2025 (web version)
Published 14 January 2026
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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 | 33.6 |
| 2024 Q2 | 33.9 |
| 2024 Q3 | 33.5 |
| 2024 Q4 | 34.3 |
| 2025 Q1 | 33.5 |
| 2025 Q2 | 33.1 |
| 2025 Q3 | 34.4 |
Source: DBT, ONS Business Investment (annual Gross Fixed Capital Formation, Volume Index Capital Services ), 2023 prices.
Gross value added
Figure 2: gross value added (£billions)
| Quarter | £billions |
|---|---|
| 2024 Q1 | 198 |
| 2024 Q2 | 200 |
| 2024 Q3 | 200 |
| 2024 Q4 | 201 |
| 2025 Q1 | 203 |
| 2025 Q2 | 205 |
| 2025 Q3 | 204 |
Source: DBT, ONS low-level aggregates, 2023 prices.
Labour markets
Figure 3: employment (millions)
| Quarter | People (millions) |
|---|---|
| 2024 Q1 | 7.28 |
| 2024 Q2 | 7.30 |
| 2024 Q3 | 7.31 |
| 2024 Q4 | 7.30 |
| 2025 Q1 | 7.22 |
| 2025 Q2 | 7.24 |
| 2025 Q3 | 7.25 |
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 | 23.1 |
| 2024 Q2 | 23.4 |
| 2024 Q3 | 23.3 |
| 2024 Q4 | 23.3 |
| 2025 Q1 | 23.7 |
| 2025 Q2 | 24.2 |
Source: DBT, ONS low-level aggregates and productivity jobs, 2023 prices.
Exports
Figure 5: goods and services (£billions)
| Quarter | Goods exports (£billions) | Service exports (£billions) |
|---|---|---|
| 2024 Q1 | 57.3 | 90.2 |
| 2024 Q2 | 58.1 | 97.8 |
| 2024 Q3 | 55.1 | 98.5 |
| 2024 Q4 | 60.3 | 111.2 |
| 2025 Q1 | 59.8 | 104.2 |
| 2025 Q2 | 56.5 | 108.8 |
| 2025 Q3 | 55.4 | Not available |
Source: DBT, ONS Trade in Services and HMRC Trade in Goods, current prices.
Quarterly estimates are derived from annual ONS data of the whole economy. Revisions can occur when official statistics are published.
Last quarter (Q4, October to December 2025)
- over £79 billion investment commitments were made into IS-8
- over 50,000 jobs from investment commitments were made into IS-8
- over £18 billion exports from IS-8 were supported directly by the government
- over £2.4 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 Q4 (October to December 2025)
More than £9 billion was directed to IS-8 frontier technologies and industries via new UK Research and Innovation (UKRI) 4-year funding allocations. This includes nearly £4 billion for Digital and Technologies and £369 million for Creative Industries.
AI growth zones in North and South Wales were announced, creating more than 5,000 jobs over the next decade, and the potential of £124 billion of private investment.
A new Connections Accelerator Service pilot was launched to provide quicker access to the electricity grid for priority projects.
A proposed approach for reducing electricity costs for eligible businesses in IS-8 and foundational sectors set out in a consultation for the British Industrial Competitiveness Scheme (BICS).
Delivery forward look for Q1 (January to March 2026)
The government will set out its defence, procurement, innovation and capability investment choices for the next decade in the Defence Investment Plan.
The establishment of London’s new semiconductor centre in King’s Cross, growing the UK’s position in the global semiconductor market with an internationally accessible location.
Plans to bolster investment into IS-8 firms across the UK to be delivered as the British Business Bank (BBB) increases activity ahead of £4 billion Industrial Strategy growth capital deployment.
The launch of £135 million of Creative Industries sector funding, allocated to deliver investment in screen, video games and music firms, supporting thousands of creative professionals and businesses across the UK.
Delivery updates across the IS-8 sectors
Advanced Manufacturing
Advanced Manufacturing updates include:
- the expansion of the DRIVE35 programme to £4 billion to 2035 to realise investment in zero emissions vehicles manufacturing through competitive grants and R&D projects
- Nissan invest £450 million to begin production of their next generation Leaf vehicle in Sunderland, supporting 6,000 jobs
- greater access to electrical vehicle (EV) charging at home for renters and motorists via new proposed planning reforms
Clean Energy Industries
Clean Energy Industries updates include:
- Wylfa on Anglesey in North Wales being selected as the UK’s first Small Modular Reactor site – over £2.5 billion funding has been provided, with 3,000 on-site construction jobs anticipated
- the publication of the Clean Energy Jobs Plan, identifying 400,000 new jobs by 2030, 5 clean energy technical excellence colleges and targeted support for North Sea oil and gas workers
- the launch of Great British Energy’s supply chain fund, worth £1 billion, supporting British manufacturing and long-term resilience
Creative Industries
Creative Industries updates include:
- 80,000 young people reached with support to get into careers in the creative sector during Discover! Creative Careers Month
- 3 new Bollywood blockbusters by Yash Raj Film secured for filming in the UK, creating over 3,000 jobs
- the publication of research and development (R&D) allocations to direct £369 million of innovation funding for businesses in the creative industries
Defence
Defence updates include:
- sites being identified for new munitions and energetics factories across the UK, with potential for up to 1,000 manufacturing jobs
- the launch of ‘Back British’ consultation to ensure defence procurement contracts benefit British businesses, jobs and skills
- the appointment of former Inmarsat CEO Rupert Pearce as National Armaments Director to drive defence reform
Digital and Technologies
Digital and Technologies updates include:
- engineering biology, artificial intelligence (AI), quantum and cyber security beingh among the frontier industries to be allocated nearly £4 billion of research and innovation funding
- the publication of plans for an AI Growth Lab – a cross-economy sandbox to help distribute AI-enabled products and services that regulation currently hinders
- the expansion of free access to compute for British researchers and scientists to train AI models and deliver scientific breakthroughs, backed by up to £250 million of government spending
Financial Services
Financial Services updates include:
- a new concierge service – Office for Investment: Financial Services – providing regulatory and wider market access support for global firms
- a new Financial Conduct Authority, the Prudential Regulation Authority Scale Up Unit, to support high potential, fast-growing firms with expert advice
- greater investor access to growth companies, with London Stock Exchange and JP Jenkins approved to operate the Private Intermittent Securities and Capital Exchange System (PISCES), a new type of stock market for private companies
Life Sciences
Life Sciences updates include:
- zero tariffs on pharmaceutical exports and other other measures to safeguard medicines access following agreement of the UK-US pharmaceuticals deal, driving investment for UK patients and businesses
- accelerating development of alternatives to animal testing, and new AI and biotech approaches which speed up drug development all outlined in the Replacing Animals in Science Strategy
- £50 million of funding for the Mental Health Goals Programme, putting people with lived experience at the heart of mental health research
Professional and Business Services
Professional and Business Services updates include:
- the extension to 2029 of UK-Switzerland Services Mobility Agreement, enabling UK consultancy and legal professionals 90-day visa-free work a year
- English Law Promotion Panel, comprising legal and business leaders, launched to reinforce the UK’s position as a global centre for legal services
- the Centre for Finance, Innovation and Technology coalition being established to accelerate digitisation of homebuying and growth in property technology (PropTech)
Business environment reforms
Reducing the cost of regulation
Actions will lead to a gross saving in red tape burdens of £1.5 billion (against a baseline target of £5.6 billion – 25% of administrative costs). This includes reforms to corporate reporting that will save businesses a cumulative total of around £230 million a year on administrative burdens.
Workers’ rights reforms
A new Employment Rights Act became law, balancing employee rights and the cost to business. Reforms are also being considered on non-compete clauses in employment contracts.
Enhancing skills
Post-16 Education and Skills White Paper committed to delivering an Industrial Strategy-targeted skills package worth over £1 billion. This is combined with over £1.5 billion for the Youth Guarantee and Growth and Skills Levy to support young people gain essential skills through work.
Capitalising on the value of UK data
Agreement with OpenAI to enable businesses to adopt AI tools, cutting the need for burdensome admin tasks.
Increasing access to talent
High potential individual visa eligibility expanded to 100 top global universities, and made it easier for top talent to use our Innovator Founder and Global Talent routes.
Driving innovation
UKRI has set out the allocation of £9 billion directly to Industrial Strategy sectors – including grants for institutes and infrastructure. £4.5 billion will be for innovative UK firms in frontier industries and cutting edge technologies to support innovation, commercialisation and scale-ups (see Table 1).
Developing a skilled workforce
Applications are open for 19 new technical excellence colleges across Defence, Clean Energy, Advanced Manufacturing, and Digital and Technologies, located in or near relevant areas of sectoral strength.
Table 1: UKRI budget allocations for IS-8 sectors across the Spending Review.
| Sector | Strategic government and societal priorities (£millions) | Supporting innovative companies (£millions) | Combined investment (£millions) |
|---|---|---|---|
| Advanced Manufacturing | 353 | 983 | 1,336 |
| Clean Growth and Energy | 377 | 799 | 1,176 |
| Creative Industries | 269 | 100 | 369 |
| Defence and National Security | 391 | 164 | 555 |
| Digital and Technologies: advanced connectivity technologies, semiconductors, and cybersecurity | 202 | 516 | 718 |
| Digital and Technologies: artificial intelligence | 1,133 | 452 | 1,584 |
| Digital and Technologies: engineering biology | 235 | 408 | 643 |
| Digital and Technologies: quantum technologies | 426 | 588 | 1,013 |
| Life Sciences | 1,080 | 428 | 1,508 |
| Professional and Business Services, Financial Services | 54 | 64 | 118 |
Removing planning barriers
The most ambitious planning reforms in a generation became law in the Planning and Infrastructure Act, scrapping preapplication consultations, streamlining judicial reviews, and accelerating delivery of the target to build 1.5 million new homes.
Supporting entrepreneurs
New Entrepreneurship Prospectus to help firms to start, scale and stay in the UK, alongside changes to Venture Capital Trusts, Enterprise Investment Scheme reliefs and the expansion of Enterprise Management Incentives options, allowing entrepreneurs to raise significantly more capital.
Supporting UK exporters
UK’s first World Trade Organization (WTO) Trade Policy Review published, explaining the UK’s strategic approach to global trade with WTO partners. New Ricardo Fund has supported over 140 projects to export globally by addressing regulatory challenges and making trade more practical for businesses.
Mobilising private capital
Launch of Sterling 20 – a new investor-led partnership of 20 major UK pension funds and insurers to channel billions in savings into infrastructure and IS-8 sectors.
Improving procurement
Expanded use of Advance Market Commitments, with government acting as an early buyer and market shaper for new technologies. First wave includes up to £100 million for novel AI inference chips, followed by clean concrete, backed by industry.
Access to finance
A 5-year strategic plan published by the BBB, focused on supporting scale-up of IS-8 sectors (see Table 2) and making financial markets work better for businesses.
Reducing energy costs
Set-up completed so that energy-intensive businesses will receive up to 90% discount on their electricity network costs from April 2026 through the Network Charging Compensation Scheme.
Table 2: examples of public finance support (October to December 2025)
| Investor | Project | Value (£millions) |
|---|---|---|
| British Business Bank: Partech Impact | Impact fund for European B2B tech companies tackling climate, industrial, agri-food and social inclusion challenges. | 22 |
| British Business Bank: Poly AI | Direct co-investment to support advanced conversational AI. | 14.9 |
| British Business Bank: SV Health Investors | $100 million commitment to a new multi-stage therapeutics-dedicated fund to support growing life sciences companies. | 74 |
| Great British Energy: Pentland | Initial share acquired in offshore wind facility to power up to 70,000 homes (alongside National Wealth Fund and Scottish National Investment Bank). | 50 |
| National Wealth Fund: Orkney Islands Council | Debt facility to cover Quanterness community wind farm project. | 62 |
| National Wealth Fund: Roam | Debt commitment to support 40,000-strong EV fast-charging pipeline. | 25 |
| UK Export Finance: OES Group | General Export Facility to support offshore wind farm maintenance services contract. | 2.5 |
| UK Export Finance: Smart Solar | Buyer Credit Facility for UK components for solar farm construction in Turkey. | 19.5 |
| UK Export Finance: Southampton Marine Services | Export Working Capital Scheme to secure ship maintenance contract with German cruise company. | 3 |
Major new investment commitments
Industrial Strategy sectors are actively supporting investment into the UK economy, including the following in Table 3.
Table 3: major new investment projects
| IS-8 sector | Investor | Project | Value (£millions) | Jobs |
|---|---|---|---|---|
| Cross-sector | Hines (Woodburn Group) | New Birmingham Knowledge Quarter in the West Midlands Investment Zone | 400 | Not public |
| Advanced Manufacturing | Associated British Ports | Solent Gateway 2 development in Southampton to deliver sustainable automotive terminal | 500 | Not public |
| Advanced Manufacturing | GE Aerospace | Refurbishment of Nantgarw site in Wales to improve capabilities | 19 | Not public |
| Clean Energy Industries | Uniper | Portfolio of projects including offshore wind and hydrogen to be completed by early 2030s | 6,950 | Not public |
| Clean Energy Industries | Cerulean Wind | 1GW Aspen floating wind project | 5,900 | >1,000 |
| Clean Energy Industries | SSE | Transformation for Growth investment plan over next 5 years | 33,000 | Not public |
| Creative Industries | Keva | Establishment of Global Creative Development Centre in Manchester | 8 | 30 |
| Defence | Alcor | AI-powered automation capability enabling improved operational security | 4 | 250 |
| Defence | MBDA UK | Contract to deliver new DragonFire laser weapon to the Royal Navy from 2027 | 316 | 600 |
| Digital and Technologies | AH Gamma | Futurenauts initiative, delivering transformative AI and robotics education | 8 | 30 |
| Digital and Technologies | CoreWeave | New data centre capacity | 1,500 | Not public |
| Digital and Technologies | Seagate | US investment to expand factory which builds hard drives | 115 | Not public |
| Digital and Technologies | AI Pathfinder | Deployment in Northamptonshire as part of a wider £18 billion programme over next 5 years | 150 | Not public |
| Life Sciences | Biocomposites and Sterling | Expansion of Keele facility and construction of 60,000 sq ft Birmingham centre | 30 | Not public |
| Financial Services | JP Morgan Chase | New Canary Wharf tower block for up to 12,000 head office staff | 3,000 | 7,800 |
| Financial Services | Goldman Sachs | Expansion of Birmingham office, as part of wider tech and AI investments | 350 | 500 |
| Professional and Business Services | Zinnov | Expanding footprint to set up global talent hubs | 6 | 50 |
UK-wide delivery
UK-wide delivery updates include the following items.
A regional investment summit was held in Birmingham, with over £10 billion commitments across the UK. This included £400 million of government support for a £4 billion Birmingham Knowledge Quarter, alongside major private investors.
The Wales investment summit confirmed over £1.4 billion of private investment. This included £600 million from Vodafone to improve 5G coverage and Associated British Ports investing £42 million in 5 Welsh ports.
A new envoy for the Northern Growth Corridor, Tom Riordan, former chief executive officer (CEO) of Leeds Council, will develop a plan for growth in the North, partnering with local leaders, universities and Northern businesses.
A £500 million investment package for new homes, infrastructure and business space across the Oxford to Cambridge Growth Corridor, building on the Investment Prospectus. This comes alongside a £10 billion expansion of the Ellison Institute of Technology R&D facility in Oxford over the next decade – creating 7,000 jobs and putting Oxford at the forefront of global scientific research.
Recipients were confirmed for the £500 million Mayoral Revolving Growth Fund which will allow mayors to invest in game-changing growth projects with the private sector.
10-year Local Growth Plans were published for Liverpool City Region, East Midlands, North East, and Cambridgeshire and Peterborough, setting out economic vision for each region.
The Crown Estate awarded Ocean Winds the rights for a floating offshore wind site in the Celtic Sea to contribute up to 4.5GW, enough to power more than 4 million homes.
The confirmation of anticipated funding for 10 places that will benefit from the £500 million Local Innovation Partnerships Fund. This was alongside the launch of a bidding competition for other high potential clusters.
£17.3 million of funding for Aberdeen Energy Transition Zone to create, grow and co-locate clean energy businesses using the new harbour facilities.
Research partnership between the Industrial Strategy Advisory Council and the University of Manchester to share knowledge and expertise, driving forward recommendations for growth.
Case study: planning acceleration for Creative Industries
Marlow Film Studios is a new development in Buckinghamshire, representing one of the largest investments in the UK creative sector in recent decades.
It will house a cutting-edge range of TV and film productions, from independent British projects to global blockbusters, with a strong focus on future-proofing the studios with technological innovations. This will strengthen UK creative talent and create up to 4,000 jobs.
In November, the government overturned a refusal for planning permission for the £750 million investment, allowing it to proceed.
A £6.2 billion investment by Universal Studios in Bedfordshire also received planning permission in December 2025 following a government decision to grant a Special Development Order. The investment will reinforce a creative industriescluster and support a further 20,000 jobs.
International markets
India
Trade mission led by the Prime Minister, the largest trade delegation, delivered nearly £5 billion of new deals and 15,000 jobs across the UK and India.
This includes:
- a £250 million commitment by TVS Motor
- £100 million by Cyient to boost innovation
- a £350 million defence deal supporting 700 jobs in Belfast
South Korea
A free trade agreement (FTA), signed to boost exports and support thousands of UK jobs. This FTA, with the twelfth largest economy in the world, is expected to grow the UK services exports by £400 million, including improved access to South Korea’s expanding financial market.
Saudi Arabia
UK delegation led by the Chancellor to the Future Investment Initiative realised £6.4 billion in trade and investment.
This includes:
- up to £5 billion of financing support from UK Export Finance for projects in Saudi Arabia, benefiting UK suppliers
- a new Barclays headquarters in Riyadh
- promotion of the Oxford to Cambridge Growth Corridor
Turkey
£8 billion Eurofighter Typhoon deal signed, securing 20,000 UK jobs, with production lines in Edinburgh, Warton, Salmesbury and Bristol.
Japan
Keidanren business delegation, Japan’s most senior business body, convened in the UK for the first time in 10 years. This strengthens the UK-Japan partnership and deepens the collaboration between government and industry for long-term competitiveness and investment.
United States
Furthering the UK-US Technology Prosperity Deal, including investments in the Oxford to Cambridge Growth Corridor and regional partnerships to advance quantum ecosystems.
This includes:
- a Scotland-Bay Area photonics and quantum ‘growth bridge’
- a partnership with the West of England Mayoral Combined Authority and the University of Bristol
- the largest regional quantum consortium in America, Elevate Quantum
Australia
Working Group of Superfunds established to identify issues and options for increased investment and a pipeline of proposals.