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Why it is so essential to reindustrialise the British economy

Why it is so essential to reindustrialise the British economy

Productivity is key to driving economic growth, but despite a decade of efforts from policymakers, official figures show that productivity per hour remained flat in the UK at the end of last year, while output per worker declined by 0.6%.

According to the Centre for Progressive Policy, the slowdown in productivity growth can be partially explained by the shift away from high-productivity manufacturing to lower-productivity service roles that have less capacity for digitisation.

This trend is supported by OECD data which indicates that labour productivity in services has been growing 1.7% slower than manufacturing in the recent decades. So, could a boost of UK manufacturing help solve the ‘productivity puzzle’?

The latest data from the Capgemini Research Institute suggests that the answer to this question is “yes”.


According to the study, reindustrialisation – which is defined by moving global supply chains and manufacturing operations closer to home – could help increase domestic manufacturing capacity to 50% in the next three years.

This growth will be driven by a £338.5 billion investment in technology innovation and sustainability initiatives, providing a much-needed boost for the UK manufacturing sector.

This trend is also expected to drive a shift toward sustainable manufacturing practices, resulting in a potential 13% reduction in the sector’s carbon emissions by 2027.

There are many ways in which reindustrialisation can drive sustainability. Firstly, reshoring manufacturing and supply chain operations can minimise long-distance transportation, reducing Scope 3 emissions.

Secondly, it provides organisations with greater control over their production processes, making it easier to adopt circular business models and be more resilient to emerging headwinds.

And finally, reindustrialisation offers a great opportunity for industry players to switch to renewable energy sources and alternative fuels as they modernise their operations.

This offers a tremendous opportunity for creating a cleaner and more sustainable manufacturing industry that can benefit everyone.

But to be able to realise these benefits, we need to drive reindustrialisation at scale. This means solving some key challenges around investment in green technologies and access to skilled talent.

Almost two thirds of the business leaders surveyed in the study believe that reindustrialisation will create new jobs and increase wages, which will drive demand for highly skilled workers.

To reduce the skills gap, organisations must upskill those already in the workforce to align with the demands of advanced manufacturing, digital skills, and emerging technologies.

These efforts need to be accompanied by a clear strategy for retaining and attracting skilled workers to ensure manufacturers can successfully compete with other industries for the best talent.

We also need a strong pipeline of fresh talent and long-term policies for embedding tech skills training throughout all stages of the education curriculum.

Businesses can support this by collaborating with government agencies to offer training and development programs in advanced manufacturing and by tapping into new technologies such as generative AI to improve the scale and efficiency of their training programmes.

Reindustrialisation could have a profound impact on the UK economy: from creating new jobs, to boosting sustainability and reducing our dependence on foreign manufacturing. We run the risk of falling behind our competitors if we don’t act now.

This opportunity will require a clear strategy for nurturing domestic manufacturing capabilities, supply chains, energy sources, and improving access to highly skilled talent.

Policymakers and business leaders need to work together to foster a competitive business environment that stimulates growth, reduces red-tape, and provides incentives for investment in green technologies and skills. Britain must be bold in the race for reindustrialisation and the huge opportunities it offers.

Mike Dwyer is Head of Intelligent Industry, Capgemini UK