This discussion paper argues that industrial strategy should become a central pillar of economic policy. Given the UK economy’s deep structural weaknesses – in productivity, trade, research and development, geographic imbalances and environmental impact – it argues that industrial strategy must go well beyond correcting ‘market failures’. It must be a more fundamental attempt to change the structure of the economy, including the volume and direction of private and public sector investment.

The paper argues that industrial strategy should seek to integrate higher demand in the economy, achieved through an increase in public investment, with the strengthening of UK-based businesses in innovation and value chains. Industrial strategy should focus not just on already world-leading ‘frontier’ sectors but on the majority of firms in the ‘everyday economy’ where productivity and wages are low. It requires much stronger governance in the UK’s nations and regions.

Here, we set out a series of proposals on how to achieve these goals, including the establishment of national missions, the creation of new institutions, new tax incentives and changes to the funding of innovation.