Cambridge Industrial Innovation Policy
UK Innovation Report 2025
What makes this report different?
The aim of the UK Innovation Report is to facilitate policy discussions on innovation and industrial performance – and the interplay between them. While numerous sources of data on the topic of innovation exist, the UK Innovation Report makes a contribution by bringing together, in a single place, innovation and value-added indicators in a concise and accessible format.
Instead of structuring the report according to traditional input and output indicators, the intention with the report is to include data that provides rich quantitative representations of the vitality of both the UK’s innovation activity and its industrial performance in an international context.
An important theme throughout the report is the analysis of sectoral data to better understand the drivers of national performance and provide more granular policy insights. While the report does not make specific policy recommendations, it does highlight areas where additional evidence and policy action may be required.
Motivation
- To review the UK’s innovation and industrial performance and compare it with that of other selected countries;
- To facilitate discussions on the relation between innovation and sectoral competitiveness; and
- To contribute to the evidence base that is available to inform industrial and innovation policy.
The UK Innovation Report remains a vital resource for understanding the evolving landscape of innovation and industrial policy in the UK. This year’s edition comes at a particularly significant moment, as the UK government has placed industrial strategy at the core of its growth agenda, with a strong emphasis on investment, technology adoption, and high-growth sectors.
In October 2024, the government published the Industrial Strategy Green Paper, marking the first step toward developing a ‘modern’ industrial strategy. The final strategy, set to be launched in spring 2025 alongside the spending review, will outline a long-term vision for strengthening the UK’s industrial competitiveness. A key element of this strategy is the development of sector plans for eight priority growth sectors, which include: advanced manufacturing, clean energy industries, creative industries, defence, digital and technology, financial services, life sciences, and professional and business services.
The past year has highlighted the growing need for evidence-based industrial and innovation policymaking. The Green Paper was accompanied by a public consultation that received over 3,000 responses, reflecting widespread engagement from industry and stakeholders. Each sector plan will require in-depth analysis to assess drivers of innovation, competitiveness, and future trends, as well as to identify strategies for enhancing the UK’s global position. However, the data necessary to support these plans is neither readily available from official statistics nor straightforward to collect. In response to these challenges, the Department for Business and Trade (DBT) launched a call for evidence at the end of 2024, focusing on access to finance for advanced manufacturing scale-ups. This initiative aims to identify key financial barriers that companies face when transitioning from technological development to commercial success. Meanwhile, the Department for Science, Innovation and Technology (DSIT) introduced the Technology Adoption Review, led by the Government Chief Scientific Adviser and the National Technology Adviser, to evaluate the UK’s effectiveness in adopting cutting-edge technologies.
As the demand for stronger evidence in industrial and innovation policymaking grows, the UK Innovation Report 2025 makes a timely contribution by providing new data, analyses and perspectives to support evidence-based policy development.
What is new in the 2025 edition of the UK Innovation Report?
This year’s UK Innovation Report builds on last year’s policy discussions and introduces new indicators and data sources to assess the UK’s innovation performance over time. It provides a deeper focus on sectoral competitiveness, aligning with the Industrial Strategy Green Paper. The report is organised as follows:
- Section 1 examines changes in the UK’s economic structure, with a focus on the contribution of the manufacturing sector.
- Section 2 provides an overview of the UK’s research and development (R&D) funding and expenditure landscape.
- Section 3 analyses shifts in the competitive position of the UK’s manufacturing sectors over the past two decades.
- Section 4 explores qualification and skills mismatches in the UK, along with the uptake of vocational education.
- Section 5 reviews public R&D expenditure on low-carbon and renewable energy technologies, as well as patent activity and specialisation in environment-related technologies.
