The UK government’s industrial strategy green paper sets out a framework for growth and investment attraction that inward investment agencies and professionals are likely to welcome.
A challenging inheritance
Back in June this year, just before the general election, a succinct article on fdiintelligence.com set out some of the challenges awaiting the incoming government. Following years of uncertainty and economic shocks, the UK was underperforming in investment attraction, including job-creating greenfield FDI.1 The broader picture was one of low GDP growth, productivity growth and business confidence.
Summits and strategies
The new government has made it absolutely clear that it intends to turn the situation around. On October 14th, at the International Investment Summit, plans to create a ‘pro-business environment’ were presented to an invited audience of global business leaders. On October 17th, the government published its green paper (for consultation) - Invest 2035: the UK's modern industrial strategy, focused on tackling barriers to investment and leveraging the UK’s areas of strategic advantage.
Creating a ‘firm foundation for investment’
After years of uncertainty and challenging conditions, the approaches set out in Invest 2035 are likely to be welcomed by organisations and professionals working to attract investment. Reassuring themes include ‘stability and long-termism’, creating a ‘firm foundation for investment’, and ‘reducing barriers to investment’ in areas such as planning. Public sector investment will ‘crowd in’ (note - not ‘crowd out’) private investment. And the strengths of the UK’s regions, specialised industry clusters and strategic industrial sites will be leveraged.
High-potential sectors
The strategy focuses on 8 high-potential ‘growth-driving sectors’*. One of them is Digital and Technologies, and it’s left in no doubt that technologies including AI - ‘using the UK’s data more strategically’ - are seen as key to unlocking growth potential across all the other sectors, and the wider economy. The Net Zero transition is another key, cross-cutting theme. In the government’s words: ‘the UK is entering a major investment cycle, where the Net Zero and digital transformations present considerable investment opportunities’.
The digital thread
The emphasis on digital technology aims to harness a significant UK advantage - a $1 trillion, global top-3 tech ecosystem. But this isn’t only about tech hubs like London and Cambridge. As we’ve found in our recent inward investment marketing projects, regions across the UK combine strengths in established industries (everything from logistics to agriculture) with leading-edge digital expertise - within both their businesses and universities.
Opportunities therefore exist to develop compelling investment value propositions focused on transforming business productivity, resilience and competitiveness through the application of ‘Industry 4.0’ digitalisation technologies to more traditional sectors - e.g. Logistics 4.0, or Agriculture 4.0. Even when sectors aren’t specifically mentioned as ‘high-potential’, this digital thread makes them integral to the government’s growth strategy.
Investment multipliers, and challenges
In the context of ‘reducing barriers to investment’ (e.g. planning and data mining) and the ‘Net Zero and digital transformations’, it’s easy to see the potential for serious investment multipliers: an ‘AI boom’ requiring massive investment in energy-hungry data centres, which in turn requires massive investments in sustainable energy technologies and infrastructure, which in turn boosts the construction sector…
But before we get too excited, we should acknowledge that the government’s industrial strategy will face challenges, both in its development and delivery. With regard to planning, the newts are back. With regard to unleashing AI, the creative industries (also a priority sector) beg to differ. The concern, of course, is getting stuck in the mud. But the government seems to be dead set on delivery, and we should hope that consultation and a partnership approach will balance competing interests, resulting in a strategy that delivers the broadest possible benefits.
Getting ready for 'considerable investment opportunities'
The digital and Net Zero technological transformations certainly should create ‘considerable investment opportunities’. And the broad strategies set out by the government, in spite of the inevitable challenges, look set to create a more stable and investment-friendly business environment. We therefore think there are good reasons for regional investment promotion agencies and professionals to look ahead with optimism. Which leads on to the question: what should they do next?
Here are just a couple of ideas:
1) Developing distinctive, technology-focused investment value propositions
Attracting investment starts with presenting a unique promise of value to investing businesses - explaining why investing in your location can deliver better ROI than investing anywhere else. Combining established sector strengths (e.g. regional industry clusters) with transformational technology solutions (e.g. digitalisation or decarbonisation), in the way referred to above, is one way to achieve this.
We would, however, emphasise the word ‘unique’. To stand out in the crowd, locations need to identify and communicate their distinctive strengths, rather than necessarily following central government sector identities - for example, it’s hard to differentiate your offer when yours is yet another location talking about ‘Advanced Manufacturing’.
2) More strategic inward investment marketing
We’ve talked above about the potential for digital technologies to transform the performance of the investing businesses we’re targeting. But the same principle applies to our own investment attraction activities.
In the world of inward investment promotion, considerable, untapped potential exists to transform investment lead generation performance, measurably, through the more strategic use of digital platforms, channels and networks, and the improved integration of online and offline, and marketing and ‘sales’ activities.
In the context of an improving business investment environment, and in the hope that the UK is entering a ‘major investment cycle’, now is a good time for investment promotion agencies to get ready!
Author:
*Advanced Manufacturing, Clean Energy Industries, Creative Industries, Defence, Digital and Technologies, Financial Services, Life Sciences, and Professional and Business Services.
Sources: [1] DBT data
