Industrial Strategy:government and industry in

partnership

March 2013

2

Why we need to act

Industrial Strategy

Progress to date

Structure

3

No return to the old growth model

• Previous growth model based on government spending, consumption and property speculation

• Contribution to GDP from Government activity grew from 0.3% between 1990-99 to 0.7% between 1999-2008, becoming the second most important driver of growth

A stable macro business environment is key to enabling growth

• The deficit means Government spending cannot contribute to growth to the same degree

Why we need to act

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

2012 2013 2014 2015 2016

Net Trade

Change inInventories

Government (C+I)

DwellingsInvestment

BusinessInvestment

Privateconsumption

GDP

2.0%

3.0%

0.8%

2.7%

3.0%

4

UK’s relative position is under threat

• Globalisation and rise of BRICS are changing UK’s relative position in global economy

• Developing countries are competing higher up the value chain, threatening the UK’s traditional comparative advantage

If the UK stands still there is a danger we will be left behind

Why we need to act

5

A stable macro environment is key• The Coalition has laid the broad

foundations … o responsible government

financeso a competitive currencyo support for science, o promoting exports, especially

to emerging marketso competitive business taxes

• … But more is needed to keep a sustained advantage 1

1.2

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1.8

2

2.2

Jan-07

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Cu

rre

nc

y U

nit

pe

r £

Euro US $

No business would operate without a long term plan

UK exports of Goods and Services to:

0

50

100

150

200

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Other emerging countries BRIC Other advanced economies EU27

£ b

illi

on

1998 2008 2009 2011

Why we need to act

Industrial Strategy: government and industry in partnership

Industrial Strategy

7

Strategic partnerships – the sectors

Industrial Strategy

Early 2013AerospaceAim: Maintain existing UK market share; secure UK employment

NuclearAim: Increase inward investment in energy supply chain

Spring 2013 Summer 2013

Life Science Strategy Dec 2011

Life Science Strategy one-year-on Dec 2012

Information EconomyAim: Optimise ICT use by business

Agri-techAim: Developing and exporting innovative technologies e.g. in food security

EducationAim: Grow UK education exports

Offshore windAim: Increase inward investment in energy supply chain

Oil and GasAim: Increase inward investment in energy supply chain

AutomotiveAim: Repatriate supply chain and exploit low carbon technologies

ConstructionAim: Improve competitiveness and productivity to support increasing exports

Professional Business ServicesAim: Export opportunities in developing economies

Progress

• Seven Catapult Technology and Innovation Centreso High Value Manufacturing, Cell Therapy, Offshore

Renewable Energy, Satellite Applications are openo Connected Digital Economy, Future Cities and

Transport Systems open by June 2013• Support for “eight great technologies”

o £600 million funding in Autumn Statement 2012• Patent Box introduced progressively from April 2013

will provide reduced corporation tax rate of 10% for companies exploiting patented inventions

Sectors

Technologies

•Life Sciences: commitment to sequence the whole genome of 100,000 NHS patients•Automotive: levered over £6bn investment into the UK. £3bn of additional supply chain opportunity: e.g. GM at Ellesmere Port, Bosch in the Midlands•£125mn invested in supply chains to encourage advanced manufacturing investment

Progress to date

Regenerative Medicine

Agri-science

Energy storage

Robotics

Big data Synthetic biology

Advanced materials and nanotechnology

Space technology

9

Progress

• Funding for Lending scheme is encouraging the banks to lend more - if it can mobilize the projected £60-£80bn

• The first steps in creating a £1bn Business Bank to support SMEs• UK Green Investment Bank operational since October 2012 - funded with £3bn

• Government is making it easier for businesses to see what it is buying, by publishing £84bn of Procurement pipelines

• Addressing strategic capabilities, e.g. tunnelling

• Employer Ownership Pilot gives employers direct access to public investment for training through a competitive fund

o £90m of funding to support 37 projects in the first tranche; more than matched by £115m of employer contributions

o Second round closes 28 March 2013; prioritising industrial strategy sectors• £6m for 500 people to study Masters level degrees in aerospace engineering

Access to Finance

Procurement

Skills

Progress to date