Skills, AI, circular economy and tariffs: what UK Industrial Strategy must tackle

Earlier this year, the UK Government made a major announcement on its Industrial Strategy, which set out a 10-year plan to boost investment and economic growth in the sector.

With the new parliamentary session now underway, we spoke to four industry experts to learn their thoughts on the strategy and what it means for manufacturers and related businesses, and to discover their predictions for the coming months and year.

The UK Industrial Strategy “was a good step in the right direction”, according to Paraic O'Lochlainn, Vice-President of EMEA at Fluke Reliability, “but manufacturers still need clarity from the government on exactly what this will entail”.  

He argues: “Right now, it doesn't quite hit the level of transformational thinking that the sector desperately needs. The government will very likely review their commitments in the coming months, so it will be important to see if they are taking the industry’s needs into account. 

Skills shortage

“The industry skills shortage is a major issue that needs to be addressed, as it’s a barrier to productivity, innovation, and competitiveness.

“In manufacturing, we’ve already learned this the hard way. Nearly 20% of the current UK manufacturing workforce is set to retire by 2026. Neglect early-in-career talent, and the strain will be felt years later – much like we do already today.

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“Our recent research also found that 90% of respondents believe the skills shortage has already impacted their organisation, especially in frontline roles like reliability engineering and maintenance.”

O'Lochlainn believes that there needs to be “meaningful action”, otherwise the Industrial Strategy won’t have the desired impact.

“The UK has a huge untapped talent pipeline, but without the right government support, we risk losing our best and brightest: feeding industry leaders, rather than leading the league.

“We need a bolder approach that unites education providers, employers, and government bodies to create effective strategies that provide the training that today’s workforce needs, as well as incentivise the next generation to choose a career path in manufacturing. This will help the UK achieve its ambitions of being an industrial leader.”

AI innovation

One of the key outcomes from the Industrial Strategy that Iju Raj, Executive Vice-President of R&D at AVEVA, thinks should be a major priority in the coming months for the government is “the creation of an ‘AI-ready economy’.

Businesses are now eager to see how planned initiatives such as the AI growth zones and the Industrial Strategy AI Adoption Fund will translate this vision into practical opportunities for growth and innovation.”

This could help to solve some of the challenges O'Lochlainn identifies, as greater investment in AI can support smaller workforces to boost productivity.

Raj explains how “to harness the AI revolution, and bring productivity and benefits for business and citizens, we need to focus on how to diffuse innovative applications into the real economy to solve urgent problems, from healthcare and education, to greening the grid.

“Accelerating AI uptake in the energy and industrial sectors is particularly important in underpinning broader economic growth.

“The UK has an extraordinary research base in science and technology and a vibrant innovation ecosystem. To capitalise on the opportunity for AI to transform our industrial base, we need to see urgent progress in two key areas: the development of our AI infrastructure, and the data maturity of our industrial sector.”

Circular economy

An increasingly bigger focus for businesses, however, is not just on the types of technology in use within the sector, but how sustainable they are. The circular economy approach is gaining traction as more businesses are looking to adopt and integrate more environmentally friendly practices via tools and technologies.

Volker Spanier, Head of Manufacturing Solutions at Epson EMEA, predicts that in the next few months, attention will shift “toward practical strategies for embedding circular economy principles across UK industries”.

“Following recent taskforce recommendations, policymakers are likely to emphasise three interconnected themes: reuse, repair, and resource recovery. These priorities align closely with ongoing efforts by manufacturers to extend product lifecycles, optimise resource use, and reduce waste.

“Renewed focus on regulatory frameworks will require manufacturers to demonstrate environmental accountability. Across sectors – from electronics to automotive – this may include clear targets for recyclability, refurbishment, and responsible material management. Cross-industry collaboration to enable shared infrastructure for repair and material recovery will be crucial, echoing the broader circular economy commitment.”

Spanier emphasises that this “parliamentary session presents a pivotal opportunity to reinforce the circular economy as both an economic and environmental strategy”.

“Policymakers can promote repair, reuse, and recycling at scale, supported by technologies that enable flexible, circular workflows.

“Organisations can prepare by auditing resource use, embedding repair and refurbishment into operations, and adopting adaptable automation and robotics to maximise efficiency and sustainability.”

Tariffs on agenda

The UK Government must also consider the bigger picture, as the sector’s ability to thrive in the coming months will partly depend on the UK’s international relationships.

Thomas Hindré, Vice-President of Growth for EMEA at Fluent Commerce, believes that “tariffs will almost certainly be high on the agenda”.

“Following the US-UK trade deal and resolution of the US-China relationship, the government is expected to focus on stabilising cross-channel trade while preparing in the case that negotiations with the US, China or Europe falter.”  

This means that across all sectors that rely on global supply chains, businesses “should not expect a return to normality immediately, but uncertainty may ease while longer-term deals are finalised”.

Hindré predicts that these sectors will be tested as to “how quickly they can respond to shifting rules”, as “even small changes to tariffs could diminish margins or lead to a decline in demand".

"With the next sitting likely to bring new guidance on duties, compliance processes, and import or export regulations, businesses should prepare for additional supply chain requirements and potential delays.”

His advice is that businesses should take steps to prepare themselves for the changes ahead: “Parliament may set the policy agenda, but [businesses] must ensure they have the operational resilience to adapt as necessary.

"Investing now in flexible systems and supply chain visibility is the most practical way to prepare for whatever changes emerge this autumn.”

Businesses across the sector will be keeping a close eye on changes to come.