The UK Government’s recent launch of “Modern Industrial Strategy 2025” marks an important event for the logistics and industrial sector despite being set against a backdrop of persistent global inflation, complex geopolitical risk, and an almost two-decade old productivity problem.
Our analysis of economic growth in Visions found that periods of recovery are becoming both shallower and broader as a result of the increasingly intertwined and complex nature of global economies. This comes as a result of an erosion of the opportunities to induce structural change that bring higher levels of growth.
A STRUCTURAL SHIFT IN FOCUS
Most recently the government has announced two transformative frameworks designed to power up the economy – ‘UK Infrastructure: A 10 year strategy’ and ‘The UK’s Modern Industrial Strategy’ which build on the principles outlined in the Invest 2035 Green Paper and recent changes to the National Planning Policy Framework.
- The UK Infrastructure Strategy, published on June 19, 2025, establishes a £725 billion investment framework designed to address decades of underinvestment and policy inconsistency that have hampered productivity and economic growth.
- The Industrial Strategy, published on June 23, 2025, presents a 10-year plan focused on eight high-growth sectors aiming to make the UK "the best place in the world to start and grow a business" by removing barriers to investment, reducing regulatory burdens, and providing targeted support to sectors.
The two major policy frameworks, represent significant programmatic change in how opportunities are assessed and prioritised. At a time of increased devolution through MSAs (Mayoral Strategic Authorities) and LA’s (Local Authorities), the latest Industrial Strategy crystallises a move away from a broad pillar-based approach that looked to deliver growth through specific deals, towards a transmission-led model that drives capital to strategic sites, theoretically allowing for a smoother transmission in delivering change at pace within local markets. Meanwhile, the Infrastructure Strategy will look to deliver a national pipeline of infrastructure improvements, with a significant impact on supply chains, clean energy and road and rail infrastructure among other key sectors.
WHAT ARE THE EIGHT PRIORITY GROWTH SECTORS?
The Industrial Strategy focuses on sectors where the UK demonstrates existing strengths and the highest growth potential for the next decade. These eight priority sectors, known as the "IS-8" are made up of a number of small sub sectors referred to as frontier industries. Five sector specific reports were released as part of the “Modern Industrial Strategy 2025” publications, of which three have significant implications for the logistics and industrial sector, these are:
- Advanced Manufacturing Sector Report – Focuses on doubling private investment and supporting six key industries: aerospace, automotive, agri-tech, batteries, space, and advanced materials.
- Clean Energy Industries Sector Report – Sets out commitments to decarbonised freight corridors, hydrogen hubs, offshore wind, and grid upgrades.
- Digital and Technologies Sector Report – Covers AI Growth Zones, semiconductor resilience, and digital twin adoption.
Other IS-8 sectors include Life Sciences, Financial Services, Creative Industries, Professional and Business Services, and Defence. It is important to note that a renewed commitment on defence spending follows a separate review of the defence sector which has recently been published.
WHERE ARE THE 22 INDUSTRIAL STRATEGY ZONES?
The new ISZs exist in 22 places across the UK – 10 with an Investment Zone, 9 with a Freeport and 3 with both. The idea being that each ISZ builds on existing specialisms through creating investible sites and places, and encouraging investment and clustering. A supplementary Industrial Strategy Zones Action Plan report was published on the 23rd of June 2025.
WHAT DOES THIS MEAN?
The £600 million Strategic Sites Accelerator is one of the key growth funds within the Industrial Strategy, and is aimed at preparation and remediation of land, and small local infrastructure upgrades. Otherwise, finance will be delivered through a series of growth funds, in conjunction with additional funding through the British Business Bank. This investment is specifically geared towards bridging the funding gap between private institutions and supporting feasibility within the 22 ISZs.
The flexible funding model enables investment zones to pick a best fit incentive package, in which opting out of future tax breaks and relief may result in a larger spending envelope for initial investment. This may result in some sites opting to accelerate initial works, and will result in different outcomes across the investment zones.
| Property Business Types | Public Support Programmes |
|---|---|
| Occupiers within Investment Zones | Tax & rates reliefs (SDLT, NI, capital allowances), direct grants, skills support |
| Private Property Developers | Strategic Sites Accelerator, planning reforms, infrastructure co-investment |
| High-Growth SMEs | British Business Bank Growth Capital, R&D grants, innovation support |
| Universities & Research Bodies | Global Talent Fund, Higher Education Innovation Fund, sector-specific R&D funding |
| Energy-Intensive Manufacturers | British Industry Supercharger, electricity levy exemptions |
| Local Government & Mayoral Authorities | 25 year rates retention |
In addition to the creation of both dedicated and targeted funds, a number of process improvements and prioritisation frameworks, delivered through the Infrastructure Strategy, are expected to reduce lead times for planning processes and national infrastructure upgrades. The UK Infrastructure strategy will therefore support a broader range of occupier demand, across key sectors such as housing, transport, defence, healthcare and energy, whilst delivering specific projects such as the Lower Thames Crossing, and the Midlands Rail Hub. Roll out of the industrial strategy will be overseen by the newly formed Industrial Strategy Advisory Council. It is expected that ISZs looking to access the above support will strive to align projects to both local masterplans and the recently released national sector strategies.
WHAT ARE THE OUTCOMES FOR LOGISTIC AND INDUSTRIAL MARKETS?
Unlocking the feasibility of projects, through both the Infrastructure and Industrial strategies, is likely to increase speculative development levels, helping to reverse a slow down in development activity that has been recorded during 2024 and early 2025. Funding targeted specifically at ISZ sites where feasibility is challenged or development has stalled may see a period of elevated development activity within non-prime locations and the 22 IZs. A wider increase in public investment into key industries such as advanced manufacturing and defence will support the drive to quality within the manufacturing sector, resulting in structurally higher levels of occupier demand for modern logistics and industrial space. Similarly, a renewed focus on R&D across key sectors, will drive supplementary demand for smaller logistics and industrial facilities as the sector moves away from traditional key clusters and towards IZs providing additional occupier incentives. This may see demand broaden from existing clusters such as the golden triangle and towards more affordable investment zones, leading to an increase in mixed use campus development.
