Publication
INNOVATION IN THE INDUSTRIAL STRATEGY SECTORS: 2025-2026 An Innovation State of the Nation Survey
Published: 7 October 2026
ERC_ IRC Research Report
Associated Themes
-
Innovation
Innovation sits at the heart of the UK Industrial Strategy and is seen as a critical driver of productivity,growth, resilience and international competitiveness. Yet national evidence suggests that innovation activity has weakened over time, with the share of innovation-active firms declining across much of the economy. Against this backdrop, this report provides a benchmark assessment of innovation across six of the Industrial Strategy’s priority sectors: Advanced Manufacturing, Creative Industries, Digital and Technologies, Financial Services, Life Sciences, and Professional and Business Services (PBS). The report draws on a dedicated survey of almost 1,000 UK firms conducted in spring 2026 and is intended to inform future innovation policy development.
The findings reinforce the economic significance of innovation. Firms that innovate were found to grow about three times faster than non-innovating firms (6.6% annual growth compared with 2.1%). At the same time, the report shows that innovation is not a single phenomenon. Different sectors innovate in different ways, invest in different capabilities, collaborate through different networks and face markedly different barriers. This diversity has important implications for policy. While economy-wide support for R&D, technology adoption and innovation remains important, the evidence strongly suggests that future policy effectiveness will depend on recognising sector-specific needs. This report aims to support these sectoral diagnoses. The focus is therefore on understanding each sector in its own right rather than
directly benchmarking sectors against each other. Future analysis could usefully extend the UK-specific analysis reported here to include other international comparisons.
Downloads
