Reindustrialise Britain
For forty years, the UK’s manufacturing industries and industrial communities have been structurally deprioritised by government and starved of investment. The result is an economy with a smaller industrial base, weaker productive investment and greater dependence on overseas capital than our European peers. The Government’s 2025 Industrial Strategy marked an important change of direction, but action has not yet matched the scale or breadth of the challenge to reverse deindustrialisation.
Britain now needs an explicit mission to reindustrialise: rebuilding and modernising manufacturing across the economy, creating sovereign productive capability, strengthening domestic supply chains and creating good industrial jobs in every region. This should include a specific target to grow manufacturing jobs.
The scale of the missed opportunity is demonstrated by Britain’s growing Industrial Jobs Gap. UK manufacturing employment has fallen by 7% since 2010, while manufacturing employment across the EU27 has grown by 3%. Had the UK followed the EU27 trajectory of manufacturing jobs over this period, we would have around 276,000 more manufacturing jobs today. Matching Germany would mean 215,000 additional jobs, and matching Spain, more than half a million (552,000).
The actual impact goes much wider than these numbers. Manufacturing jobs support extensive supply chains and wider employment beyond manufacturing such as in logistics, distribution and business services1, and their loss has been concentrated in industrial regions including Wales, the Midlands, Yorkshire & Humber, the North East and North West.
Our European peers have recognised the benefits of retaining a more balanced economy and defending their industrial base, including higher wages, lower regional inequalities, societal and economic resilience. While European industry is still facing significant pressures, many of our peer countries have retained many more manufacturing jobs than the UK, by putting in place pro-active industrial policies.
Behind the UK’s Industrial Jobs Gap lies failure to take a similar approach – including a chronic investment gap. UK manufacturing investment has languished at just over 1% of GDP for much of this century: 1.5% or below for every year since 2001 except 2021. This is a fraction of the EU average of around 3.5% and close to 4% in Germany. Public industrial investment also falls short: OECD data show industrial grants in 2023 (defined more broadly than manufacturing, to include direct government expenditure transferred to businesses in industrial sectors without repayment) are equivalent to 0.33% of UK GDP, compared with 0.77% in France, 0.84% in Germany and 0.65% in Italy. Scaled to the size of the UK economy, matching these countries would see £9-14 billion more public industrial grant investment every year.
At the same time, Britain has developed an increasingly extractive economic model, in which too much of the value generated by businesses is taken out in the form of dividends or share buy-backs, rather than reinvested in the businesses’ productive capacity and the workforce. This characterises both domestic and foreign-owned businesses, but the UK’s unusually high reliance on overseas ownership exacerbates the problem, as returns flow out of the UK and investment decisions are made overseas. This makes it harder for government to shape the direction of UK industry and the economy.
Manufacturing reflects this wider pattern: foreign-controlled businesses now control an estimated 59% of all UK manufacturing turnover, rising to 80% in computer, electronic and optical manufacturing, 69% in chemicals, pharmaceuticals, petroleum, rubber and plastics, and 67% in metals and machinery. Foreign investment can bring benefits, but the lack of domestic investment and ownership combined with high levels of foreign control also means the return on investment is offshored, while crucial decisions about investment, products and the future of UK plants are often taken at multinational headquarters overseas, with British factories competing against sister sites around the world for investment.
Reindustrialisation offers the opportunity to break this cycle. Growing our industrial base to achieve a more balanced, modern economy offers a golden thread connecting stronger growth and resilience with reduced regional inequality, good jobs, greater economic security and delivery of Britain's infrastructure, housing and clean energy ambitions. Supporting all our industries to capture the competitive benefits of decarbonisation upgrades and the climate transition and other technological shifts, with upgrades to supply chains so they are futureproofed for the long run.
This does not need to mean a wholesale shift away from foreign investment, nor does it mean returning to the UK of 40 years ago. But a modern approach that combines much greater public and private productive investment with stronger domestic ownership, supply chains and public capacity to shape the future of strategically important industries.
The TUC proposes five priorities:
- Make reindustrialisation a national mission: establish a Reindustrialise Britain Unit in No.10 North, backed by a cross-government Mission Board, to set industrial expansion targets, develop investment and supply-chain plans and coordinate the institutions and policy levers needed to deliver them. The Mission should be defined around job growth numbers, and should be structured to complement the existing Industrial Strategy process by strengthening supply chains, workforce capabilities and industrial capacity in the majority of manufacturing sectors that fall outside the Industrial Strategy. This should include BIST and DESNZ working together to harness industrial decarbonisation to upgrade the breadth of manufacturing.
- Introduce a UK Industrial Accelerator Act: legislate to use procurement, subsidies, infrastructure spending and conditions on major inward investment to build domestic manufacturing capacity, increase UK content and strengthen supply chains. This should be delivered in partnership and parallel with the EU, to achieve greater alignment and collaboration.
- Establish a Reindustrialise Britain Fund: provide substantially greater patient public capital through grants, concessional finance and strategic equity stakes to modernise, expand and decarbonise industry and its supporting infrastructure.
- Bring industrial energy costs down to competitive levels: shift policy costs away from manufacturers, extend support beyond the minority covered by existing schemes, reform wholesale pricing and rebalance the financing of network investment.
- Guarantee good work across the country: attach strong fair-work conditions to public investment and contracts, including decent pay and conditions, trade union access and collective bargaining, apprenticeships, job security and worker voice, including through updated procurement legislation.
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