The government is preparing an industrial strategy to focus on the sectors offering the highest growth opportunity for the economy and business. Eight growth-driving sectors have been identified. Mickledore has considered the drivers of change in these sectors and the implications for business support and investment.
Pace of change
The advances in digital and technologies over the last few years have radically transformed the way businesses work. Digital transformation has already enabled a vast number of businesses and organisations to move from paper-based to digital and data-based operations and processes. However, the changes are not about to stop, and rather, we are about to experience an exponential rate of change with the fast development of Artificial Intelligence (AI) and other emerging technologies.
The UK is the third country in the world (after the USA and China) to have a tech ecosystem valued at over $1 trillion. Recent UK governments have recognised the importance of digital and technologies to support, accelerate economic growth and remain globally competitive. As such, and for example, a National AI strategy was published in 2022, followed by, in 2025, an AI Opportunities Action Plan making 50 recommendations across key areas: improving data capabilities and access, developing AI talent, reforming regulation, and driving adoption across both public and private sectors. More recently, the Labour government declared Data Centres as critical infrastructure, a radical development.
What exactly is the digital and technologies sector?
The digital and technologies sector is somewhat difficult to define. A few years ago, we would have provided a definition along the lines of “economic activities related to the production of digital content, ICT goods, and ICT services and includes IT hardware, software, telecommunications equipment, digital media and related services”. This definition is now far too narrow and more recent definitions tend to adopt a 'digital inputs' approach, which additionally includes economic activity enabled by digital and technologies activities. The rapid evolution of the sector has seen the rise of emerging technologies such as AI, large language modelling, big data, data analytics, quantum computing and many more.
A pervasive and enabling sector for the whole economy.
The traditional way to consider sectors in silos is over. We have seen this with Life Sciences and Advanced Manufacturing on the Med Tech side, but Digital and Technologies is now ubiquitous and can be found as one of the main priorities and driver for innovation and investment across many traditional sectors. From digital twins in manufacturing to blockchain in Business Professional and financial services, tech is everywhere and the pace of adoption is accelerating.
The table below provides examples of technologies which have already impacted several sectors.
Source Mickledore 2025
Risk mitigation and strategic priorities to consider for local areas.
The advance of digital and technologies seems like to golden thread for innovation and growth. However, this doesn’t come without risks. Cyber attacks are getting more frequent and more sophisticated, with potential catastrophic implications for organisations. The increase in adoption of digital systems and processes increases the risks and potential vulnerability for the private and public sector alike.
Considerations around ethics and inclusion in a digital economy should also be at the forefront of any adoption or implementation plans in order to avoid a tiered growth for economies and ensure that no one is left behind. In September 2024, the Good Things Foundation reported that consistently across the different measures, a range between 15% and 20% of UK citizens, children or households are affected by limited digital access. This needs to be addressed as a priority to ensure inclusive economic growth.
In addition, infrastructure needs to be able to support the development of digital and technologies, and this, represents another strategic choice. For example data centres, which have become a government priority to support the development of AI, come with controversial drawbacks in terms of employment site use: low job density, large energy supply and negative environmental impact. They will however render to area attractive for more digital and technology investment.
Grow local, attract global
The digital and technology sector is based on strong collaborative and innovative ecosystems. Global investors will look for vibrant local ecosystems as one of the drivers for relocation. Therefore, supporting these local start-ups and scale-ups will contribute to the attractiveness of an area.
Talent is also one of the main drivers for digital and technologies investments, but the UK is experiencing a significant digital skills shortage. In January 2025, a research report from the City-Region Economic Development Institute (City-REDI) at the University of Birmingham, has examined digital competencies across all occupational categories and has found that the UK could face economic losses of up to £27.6 billion by 2030 due to unaddressed digital skills shortages, with over 380,000 full-time equivalent (FTE) jobs potentially at risk.
Local areas should therefore really focus on growing digital skills talent locally, as this will make a real difference in the attractiveness of the place for investment and innovation and overall economic growth.
Conclusion
The digital and technologies ultra-fast and exponential pace of innovation and adoption of the last 10 years has changed the landscape of economic growth. Whilst these technologies could be dubbed as the golden ticket, they don’t come without risks or strategic priorities considerations. It is therefore reassuring to see this sector included in the Modern Industrial Strategy and it will be given significant attention and hopefully deliver the benefits intended whilst addressing and minimising the potential challenges.
Mickledore is an economic advisory business focused on strategy, investment, business cases and evaluation. We have worked on sector strategies across the UK. For more information or a discussion about specific local circumstances contact Nigel Wilcock at nwilcock@regionaldevelopment.co.uk