The government’s 10 year industrial strategy is aimed at promoting enterprise investment to make it quicker, easier and cheaper to do business in the UK. But which companies and sectors could be the big winners from the latest shift in Labour’s plan for growth?
“Giving businesses the confidence to invest and create 1.1 million good, well-paid jobs in thriving industries,” is how the government announced its industrial strategy on 23 June.
Dan Coatsworth, investment analyst at wealth firm AJ Bell, said one of the most eye-catching parts of the UK strategy is the pledge to cut energy costs by up to 25% for up to 7,000 manufacturing industries from 2027, including aerospace and chemicals.
Sign up to Money Morning
Don’t miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don’t miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
“Lower energy bills should equate to higher profit margins, which in turn could boost group earnings and potentially act as share price catalysts,” he said.
Aircraft engine maker Rolls-Royce and chemicals group Croda could be beneficiaries of the industrial strategy for this very reason, Coatsworth pointed out.
“The market has already singled them out as potential winners given the upward share price movements since the strategy announcement.”
What’s going on with the UK stock market?
UK stocks were already on a bit of a roll even before the government’s industrial shake-up. The UK has been one of the best performing regions globally for investors in the first half of 2025, according to analysis by AJ Bell.
“Investors could have made more than four times as much money investing in the UK stock market than in the US so far this year. The FTSE 100 has returned 9.6% including dividends, compared to just 2.1% from the S&P 500,” Coatsworth pointed out.
The FTSE 100 is full of the type of stocks that appeal to investors when there is uncertainty in the world – which, with a first half year full of tariff wars and then actual wars, there has been in abundance.
“Investors seek companies with defensive qualities and the UK market has them in spades,” Coatsworth said.
Industries including tobacco and telecoms should have steady earnings regardless of what’s going on in the world, hence why the likes of British American Tobacco and BT have been among the best performing UK shares this year.
But which UK companies could do well in future out of the new industrial strategy? The government’s plan is for a decade – just the sort of medium-term investing time horizon encouraged by fund managers and financial advisers (though potentially not the same length of time the government itself will last).
We asked Susannah Streeter, head of money and markets at Hargreaves Lansdown, to pick her potential UK stock market winners.
For the most popular funds to invest in, check out our separate guide.
Which UK stocks could be worth investing in?
Chemicals – Croda
Croda develops and supplies chemical ingredients for industrial applications and the life sciences, both areas of focus in the UK’s industrial strategy. Streeter said: ‘’Croda looks set to benefit from the government policy through the reduction in energy costs and support for sectors it supplies.”
Croda has seen investor sentiment strengthen a little off the back of a strong first quarter, Streeter pointed out, adding it has shown nimbleness at bringing products to market and should be well placed to take advantage of the changes brought in by the industrial strategy given it has a broad manufacturing footprint and an ability to foster strong research and development (R&D) based relationships with customers.
Aerospace – Rolls Royce
The industrial strategy includes aerospace, which is right at the centre of Rolls Royce’s wheelhouse, both civilian and military sectors. Space is also a focus, and Rolls Royce could benefit here, said Streeter, given its Novel Nuclear program which focuses on developing micro-nuclear reactors for lunar and deep space missions.
It has already been selected as the preferred bidder by Great British Nuclear in a competition to develop Small Modular Reactor (SMR) technology in the UK. “Combined with the UK’s long-term pledge to increase defence spending to 3.5% of GDP and allocate another 1.5% in security provision, Rolls Royce appears well placed to benefit from future government contracts and support,” said Streeter, “but investors should be mindful that plenty of upside has already been priced into shares”.
Renewables – Greencoat wind
Part of the industrial strategy is to build a more robust supply chain and improved grid connections for clean energy technologies, including wind energy. This could lead to more efficient and cost-effective operations for suppliers and the focus on upskilling workers for the sector may also help with workforce shortages.
Greencoat wind is a large renewable energy infrastructure trust which has struggled over recent years as sentiment towards the sector has soured partly due to the high costs of borrowing, in an era of high interest rates. “There are some hopes Greencoat will be able to benefit from a change in investor attitudes towards renewable investments as the net zero target dates edge closer and the government has made clean energy a focus of its industrial strategy,” Streeter said.
Want to add some clean energy investments to your portfolio? Read our explainer on the top sustainable funds.
Construction – Balfour Beatty
Balfour Beatty finances, develops and delivers projects right across the infrastructure landscape, including transportation power and utility systems. Pledges to improve national infrastructure as part of the industrial strategy like clean energy and transport systems should provide a tailwind for Balfour Beatty, said Streeter. The public sector makes up over 95% of future orders in its UK business and so it should benefit from the government-led infrastructure boost.
Housebuilders – Taylor Wimpey
The government’s efforts aimed at shaking up the planning system and fast-tracking urban brownfield sites for development should help companies like Taylor Wimpey, which have been hampered by slow approvals of projects.
Streeter said: “The company has a strong land bank so is ready to capitalise on a reduction of red tape and an upswing in demand. The era of higher interest rates put housebuilders in a tough position, but headwinds are easing with more interest rates eyed on the horizon.”
Brickmaker Ibstock
It’s been a tough couple of years for brickmaker Ibstock. Elevated mortgage rates have been weighing on housing affordability, causing housebuilders to be conservative about starting new projects, Streeter pointed out. She thinks there are early signs that we’ve turned a corner now though. Confidence and activity in the housebuilding market is starting to pick back up and the government’s pledge to speed up planning processes, which it is focusing on, alongside the industrial strategy, should help.
“Ibstock now has the largest brick-making capacity in the UK and upgrades to other sites should help lower average production costs. That means the group is arguably better placed to benefit from higher demand if it really ramps up again,” Streeter said.
Banks – NatWest and Lloyds
With the infrastructure road map laid out, there are expectations that, if delivered, the uptick in activity could lead to a modest boost to GDP. “This may help UK-focused banks like NatWest and Lloyds, which are seen as bellwethers for the UK economy,” said Streeter.
