The Competition and Markets Authority (CMA) Applies our AI to Gain a Clearer Understanding of the UK’s Industrial Strategy Sectors.
The UK’s Industrial Strategy outlines eight key sectors set to drive future growth, but tracking these sectors isn’t straightforward with official statistics and traditional SIC codes. That’s why it is great to see the Competition and Markets Authority (CMA) using our AI capability to help build a clearer picture that supports the UK government’s growth mission.
The economists at the CMA combined official data from the Office for National Statistics (ONS) with rich web data on companies to research these critical industries for the UK economy. Below are some of the key findings and recommendations of the study.
What Can History Teach Us About Building a Smarter Industrial Strategy?
As the UK government continues to develop a new industrial strategy, it’s clear that there’s a lot to learn from what has – and hasn’t – worked in the past. A recent report by the CMA highlights the key lessons from decades of industrial policy, both in the UK and internationally. The message is clear: to succeed this time, the UK needs not only ambition but better evidence and data to guide decisions.
Past Lessons and Modest Gains
Industrial policy – government action aimed at supporting certain sectors of the economy – has taken many forms over the years. In the UK, there’s been a traditional preference for broad tax incentives like R&D tax credits, rather than more direct interventions such as targeted grants or state-backed loans. These tools can boost employment and productivity in targeted regions or industries, but the report notes that their effects tend to be modest overall. Their success often hinges on how well-designed and well-targeted they are.
Focusing on the Right Sectors
The government’s Green Paper on industrial strategy outlines eight key sectors – from advanced manufacturing and digital technologies to clean energy – that are seen as vital to the UK’s future prosperity. These sectors are not only more productive than average but also central to UK supply chains. However, many of them lag behind international competitors when it comes to levels of investment and innovation. Addressing this gap is critical if the UK is to compete globally.
The Role of Data and Evidence
A striking insight from the CMA’s review is just how often policies have been implemented without robust evidence or sufficient evaluation. There are still significant gaps in data on business performance, supply chain resilience, and the long-term effects of past interventions. Without better data and more rigorous analysis, there’s a risk that new policies will repeat old mistakes – or miss opportunities to support emerging industries effectively.
For a modern industrial strategy to succeed, the UK will need to invest not only in sectors, skills, and infrastructure but also in the tools to measure what’s working and what isn’t. More transparent data sharing, independent evaluation, and a commitment to learning from experience are all essential components of a smarter, more effective strategy.
Looking Ahead
The CMA’s findings reinforce the importance of an evidence-based, flexible approach to industrial policy. As the UK faces complex challenges – from net zero transitions to global economic competition – tailoring interventions to the country’s strengths, while keeping markets competitive and outcomes measurable, will be key.
You can read the full report here.