British finance minister John Healey declared a “new age of industrialisation” on Monday with a plan to support defence investment, but he and Prime Minister Andy Burnham face broader challenges to reverse decades of decline in UK manufacturing.
Here is a summary of issues confronting the government as it strives to reindustrialise Britain’s economy, with high-growth technology sectors at its heart.
WHAT HAPPENED TO UK MANUFACTURING?
Britain once led the world in heavy industry with car-making, shipyards and steel dominating some regions. After declining in the 1960s and 1970s, many sectors failed in the 1980s when the Conservative government of Margaret Thatcher removed state support and competition from Asia grew.
Manufacturing accounted for about 9% of Britain’s economic output in 2025, down from 33% in 1970, marking the steepest decline in the Group of Seven large advanced economies.
Britain was the first G7 economy to export more in services — from finance and legal advice to management consultancy and advertising — than in goods. While artificial intelligence is expected to boost productivity more in services industries, it has also provided benefits for manufacturers over the past year.
WHAT DOES THE GOVERNMENT PLAN TO DO?
Burnham, the former mayor of Manchester in northwest England, has pledged to revive economic growth and spread it more evenly around the UK. He has opened a new “No 10 North” office in Manchester to tackle what he says has been an excessive focus on London.
In June, before succeeding Keir Starmer as prime minister, Burnham said Britain needed to “safeguard sovereign manufacturing and production capability across the country in critical sectors like steel, defence, energy, food and farming – rather than just being prepared to let it just go as we have sadly done in the past.”
In a speech to Labour’s annual conference on Monday, Healey highlighted how technology was offering careers to people in areas hit by the collapse of mining. “Our coal mines are not coming back, but this is how Britain’s industrial parts are being remade now for the modern world,” he said.
Burnham has said he wants to help the fast-growing life sciences industry by encouraging more cross-UK partnerships such as between Cambridge and Manchester and has talked about using public procurement policy to support British suppliers.
WHAT ARE THE CHALLENGES?
Top of many UK manufacturers’ wish-list is reducing industrial energy costs which are higher than in many other countries. Lobby group MakeUK wants the government to move levies that fund the net-zero transition from manufacturers’ power bills into general taxation.
Other priorities for businesses include reducing the rise in employment costs, which jumped when Healey’s predecessor Rachel Reeves increased employers’ social security contributions.
Healey announced on Monday the return of a trade union-led training programme scrapped by the Conservatives in 2021, part of a broader push to improve skills and vocational qualifications.
Brexit is another problem for many sectors, especially car manufacturers, as the European Union moves to introduce “Made in Europe” provisions to support domestic production.
CAN THE GOVERNMENT AFFORD REINDUSTRIALISATION?
Britain’s strained public finances limit the scope for large-scale state investment.
Healey reiterated on Monday that his first budget on October 28 would maintain fiscal discipline, constraining government spending.
The country’s National Wealth Fund is making targeted investments in areas including clean energy, but its resources are far smaller than the sovereign wealth funds of countries such as Norway and Saudi Arabia.
As a result, Burnham and Healey may focus support on sectors where Britain already has competitive strengths, including aerospace and pharmaceuticals, while seeking to boost growth through faster planning approvals and improved infrastructure.
(Writing by William Schomberg）
