Our CEO, Chris Iveson shares his view on the 2025 UK Innovation report, published by Cambridge University. His view? Chris believes digital transformation and a new narrative can make UK manufacturing a major growth industry once again.
Here's what he had to say:
"While the UK Innovation Report 2025 provides robust research into the long-term fortunes of the manufacturing sector, its focus on the past 25 years paints a bleak picture, and digital technologies are set to change this narrative. There is a huge opportunity to make UK manufacturing a major growth industry once again.”
“UK manufacturers have encountered fierce global competition in recent decades, and we are not alone in losing market share to lower-cost locations. But we’ve avoided a race to the bottom by focusing on higher-value products and production processes. That adjustment was tough, and inflation has been brutal in the last couple of years, but today’s picture is more positive: UK manufacturing has stabilised post-COVID, digitised faster than any other part of the economy, and achieved productivity gains that exceed those in other major manufacturing economies".
“Economic shocks have done significant harm to UK manufacturing output in the last 25 years, the value of which fell by 13% during the 2008/09 financial crisis and by 12% in 2020 due to COVID. The financial crisis followed a decade of declining output. Brexit made manufacturers nervous about investments that would support growth and productivity. And while COVID was devastating for many, it prompted a wave of transformative technology adoption around automation, data analytics and AI. These new technologies are already making UK manufacturing more efficient, productive, and cost-competitive globally. Those that embrace them will be well-placed to prosper, now and in the future.
Manufacturing stands out as one of the sectors with the fastest productivity growth, with notable productivity gains in transport equipment, machinery, metal products, and automotive between 2010 and 2022.
Source: Cambridge University - UK Innovation Report 2025
“There are fewer manufacturing workers in the UK than in 2000, but that contraction happened in the noughties, and the workforce has remained fairly constant since 2010. But it’s the value of their work that is most striking. UK manufacturing output was worth £91k per worker in 2000 and has risen well ahead of inflation to £237k today. This is why manufacturing can pay better wages than many other sectors and can attract top technical and engineering talent. World Bank data shows that the value added by factory workers in the UK increased more than in any other major manufacturing economy between 2018 and 2023. Today, only US factory workers create more value more efficiently than we do in the UK.
Credit: Cambridge University UK Innovation Report 2025.
“Necessity has been the mother of invention since 2020. The adapt-or-die climate forced more manufacturers to adopt technologies and working methods previously only pursued by deep-pocketed pioneers and early adopters seeking first-mover advantage. At the start of 2024, just 9% of UK manufacturers had yet to make any effort or plans to transform themselves with digital technologies, a lower proportion than any other sector of the economy.
“But innovation also caught up with the needs of mainstream manufacturers. Cutting-edge research from institutions such as the University of Sheffield’s Advanced Manufacturing Research Centre became a commercial reality, and – crucially – the rise of cloud computing and Software-as-a-Service business models made it possible for many more manufacturers to adopt automation, data analytics and AI, and to achieve substantial returns from what have become relatively low-risk investments.
“The Cambridge report suggests UK manufacturers could invest more in R&D, and some will. However, most producers should be looking to buy rather than build new manufacturing technologies and processes. Research institutions are spinning out more and more companies with world-leading technologies that manufacturers can adopt easily and achieve rapid ROI. It is far less costly and risky for manufacturers to adopt these solutions, whether at the pilot stage or when fully proven, than to focus on developing their own innovations in-house.
The UK: a leader in government support for business R&D - In 2021, the UK provided the highest level of government financial support for business R&D as a share of GDP among OECD (Organisation for Economic Cooperation & Development) countries, reaching 0.48% of GDP, more than double the OECD average. The majority of this support came in the form of R&D tax relief, which accounted for 0.33% of GDP, while only 0.15% of GDP was allocated through direct funding.
Source: Cambridge University - UK Innovation Report 2025
“We can’t change the past, but we can change the narrative. UK manufacturing is no longer a declining industry; it is highly innovative, high-value, and globally known for producing high-quality products. It is leading the way with digital technologies and leading the world in productivity gains. This is a sector with massive growth potential. We need to champion it, show it is still a place for ambitious and exceptional talent, and incentivise manufacturers of all shapes and sizes to adopt the new tools and technologies to give them a compelling competitive edge in today’s global economy.”
The UK Innovation Report 2025 is available to download from the Cambridge University website, which can be accessed here.
