This article has been co-authored and researched by Frank Holmes, Partner Gambit Corporate Finance and University of Bath student Ben Greenhaf.
Whether we are citizens, employees, scholars or consumers, our daily lives are heavily shaped by strategies from public, private, academic and governmental institutions. Yet, many of these strategies are rooted in pre-set mission statements, off-the-shelf management models, or narrow organisational agendas. They often fail to identify the root causes of the problems they aim to solve, leading instead to short-term fixes that allow inefficiencies to return time and again.
At its core, strategy should be a blend of policy and action aimed at solving major challenges or unlocking new opportunities. For a strategy to succeed, it must identify the “crux”, the central issue that appears solvable and then design a clear plan to remove obstacles to its resolution.
Recently, the UK government launched a range of initiatives designed to stimulate growth. These include the 10-year Industrial Strategy 2025, the upcoming Spending Review, Investment and Industrial Zones, AI Growth Zones, and a Strategic Sites Accelerator designed to address stagnant productivity. These initiatives are emerging at a time of record national debt, an expanding population of economically inactive individuals, and widespread infrastructure vulnerability.
The UK’s economic decline predates recent shocks like the COVID-19 pandemic and the war in Ukraine. It can be traced back to Brexit, the 2008 financial crash, and even the end of the 1990s ICT boom. Weak demand, volatile liquidity, and persistent uncertainty have choked economic momentum. While technology has steadily progressed, productivity has remained flat, with low levels of R&D investment and a general reluctance among businesses to commit to capital improvements or workforce development. Instead, many firms have responded to rising demand by simply increasing their labour inputs, rather than by improving efficiency.
This stagnation has reached a point where the Bank of England is now warning that slack in the labour market, fewer people being hired or remaining in work, may justify lowering interest rates. All signs point to one inescapable conclusion: we must repurpose human capital and embrace digital efficiency if we are to revive productivity.
But this won’t be painless.
The transition will bring job displacement due to automation and artificial intelligence, and it will require significant investment in skills, training and social infrastructure to support those affected.
Currently, only around 15% of UK firms (approximately 432,000) use AI. Yet, research from St Andrews Business School suggests AI adoption could boost SME productivity by up to 133%. The challenge is that the benefits will not arrive overnight. As with the adoption of computers in the 1960s, which only produced significant productivity gains from the mid-1990s onwards, there will be a lag. But the long-term gains could be substantial, with researchers estimating digitalisation could push UK productivity growth to 2.8% annually over the next decade.
In the meantime, governments and public institutions must focus their efforts. They need to promote procurement that supports innovation, invest directly in R&D and skills, revise outdated competition rules, remove regulatory barriers, and stimulate demand through targeted fiscal policy.
Infrastructure gaps, especially in housing and energy, must be addressed with urgency, and businesses must be incentivised to adopt net zero commitments.
While these aims are reflected in various government announcements, such as energy bill subsidies, the true test lies in delivery. Turning policy into real outcomes is where success or failure will be determined.
Geopolitical instability reinforces the need to avoid deindustrialisation and instead push for national security through self-sufficiency.
Manufacturing continues to be a vital pillar of the UK economy, powering supply chains and contributing significantly to research and development. As factories evolve with greater automation and digitalisation, the demand for a new breed of skilled workers, technicians, engineers, and digital specialists is accelerating. However, nearly half (47%) of employers in advanced engineering report that their workforce lacks the necessary IT capabilities. Despite this challenge, the UK possesses world-class design talent and a rich vein of intellectual property and brand development. These strengths not only enhance the competitiveness of our manufacturing sector but also offer global open-source and licensing opportunities—with minimal need for heavy capital investment.
With larger firms employing only 40% of the workforce, it’s clear that widespread training must reach smaller enterprises too if we’re to unlock meaningful productivity gains.
The green energy transition adds further urgency. The UK must be able to manufacture its own wind turbines, modular nuclear components, and grid infrastructure if it wants to avoid supply chain disruption and remain globally competitive.
There’s a well-worn phrase: we have godlike technology but childlike attention spans.
Despite astonishing advances, we repeatedly squander the potential for prosperity. That must change.
Our past success was built on a willingness to take risks, work hard and invest in long-term goals. National pride and discipline helped power innovation and economic progress. Without those traits, our current trajectory of slow decline could become irreversible.
This may sound bleak, but it's a realistic assessment. From the economy to healthcare, housing, education and immigration, the UK faces a series of interconnected crises.
Each will only improve if we address the crux of what is driving their deterioration.
Three centuries ago, we led the world through bold ideas, entrepreneurial spirit and practical application. We now need leaders willing to face short-term discomfort in order to rebuild long-term national strength.
