Key sectors identified by the Labour government as having the “greatest potential for growth” have suffered job losses in 2025, casting doubt on the efficacy of Prime Minister Andy Burnham’s industrial strategy. An annual report from the former Department of Business and Trade, which has since been reorganised, reveals that employment across these eight priority sectors, known as the 'IS-8', fell by 0.6 per cent last year compared to 2024.
These IS-8 sectors, which include vital areas such as life sciences, financial services, and defence, were central to the government’s ambition to generate 1.1 million new jobs across the UK by 2035. The findings are a significant blow to the government's economic agenda, particularly given the broader trend of rising unemployment across the country, which saw the jobless rate increase to 4.9 per cent from mid-2024, leaving an additional 200,000 individuals out of work.
Shadow Business Secretary Andrew Griffith criticised the figures as “damning”, arguing that Labour's policies were detrimental to industry. He pointed to the £25 billion tax increase on employers via National Insurance contributions, implemented by former Chancellor Rachel Reeves, and the perceived high electricity prices faced by British businesses as key factors hindering job creation. Mr Griffith called on the government to adopt a “cheap power plan” and reduce taxes on employers.
Despite the employment downturn, the report also noted some positive indicators within the IS-8 sectors. Productivity saw a three per cent increase, and both goods and services exports were higher. However, the report also highlighted challenges in data collection, with some sectors like defence and life sciences having only “partial coverage” in official statistics, suggesting the government may not have a fully accurate picture of performance.
Concerns also persist regarding the future of jobs in sectors such as professional services and creative industries, which are part of the IS-8. Leading economists have flagged these areas as being particularly susceptible to job displacement due to advancements in Artificial Intelligence. The Organisation for Economic Co-operation and Development (OECD) recently indicated that London, with its strong concentration of professional and financial services roles, could experience a significant impact from AI on its jobs market.
A government spokesperson defended the strategy, stating: “Our industrial strategy is designed to give certainty and stability to companies, and our latest report confirms it’s working. The UK has attracted around £380bn of private investment since its launch last year, and Skills England estimates there could be over a million more priority jobs by 2035 in certain sectors.”