What the UK’s Invest 2035 Means for Innovative SMEs

In a world where economic uncertainty has become the norm, the UK’s recently published Industrial Strategy, also known as Invest 2035, offers a refreshing dose of clarity and ambition.

Invest 2035 is not just a government blueprint; it’s a call to action for businesses, especially small and medium-sized enterprises (SMEs) that thrive on innovation. For these agile, forward-thinking firms, the strategy presents both a challenge and a golden opportunity. Let’s unpack what this means for the UK’s innovative SMEs and why it might just be the boost they’ve been waiting for.

A Strategy Built for Growth

At its core, Invest 2035 is a 10-year plan designed to drive long-term economic growth by focusing on eight high-potential sectors: Advanced Manufacturing, Clean Energy, Creative Industries, Defence, Digital & Technologies, Financial Services, Life Sciences, and Professional & Business Services. These sectors aren’t just buzzwords they’re the engines of future productivity and global competitiveness.

For SMEs operating in these areas, the strategy signals a clear intent: the government wants to partner with you, invest in you, and remove the barriers that have historically held you back.

What’s in It for Innovative SMEs?

Here’s how Invest 2035 translates into tangible benefits for SMEs:

• Access to Finance: The British Business Bank’s financial capacity is being expanded to £25.6 billion, with an additional £4 billion earmarked for growth-driving sectors. This means more funding opportunities for start-ups and scale-ups, especially those developing cutting-edge technologies or sustainable solutions.
• Skills and Talent Development: With an extra £1.2 billion annually allocated for skills by 2028–29, SMEs can expect better access to a skilled workforce. Government-backed training packages in digital, defence, and engineering will help bridge the talent gap that many small firms face.
• Reduced Costs and Red Tape: The strategy aims to cut electricity costs by up to 25% for energy-intensive industries and reduce regulatory burdens by 25%. For SMEs, this could mean lower overheads and faster time-to-market.
• Infrastructure and Connectivity: Investments in transport, broadband, and grid connections will improve access and efficiency, particularly for SMEs in rural or underserved areas.
• R&D and Innovation Support: With R&D spending projected to reach £22.6 billion per year by 2029–30, SMEs in the tech, life sciences, and clean energy sectors can tap into grants, partnerships, and innovation hubs.

A Global Outlook with Local Impact

One of the most exciting aspects of Invest 2035 is its international ambition. The UK is deepening trade relationships with the EU, US, India, and members of the CPTPP, while also launching Industrial Strategy Zones across 22 locations. For SMEs, this opens doors to global markets and supply chains without the need to relocate or scale prematurely.

And it’s not just about exports. The strategy encourages inward investment, meaning SMEs could find themselves collaborating with international partners or benefiting from foreign capital.

Stability in an Unstable World

Perhaps the most underrated feature of Invest 2035 is its commitment to policy stability. The creation of a statutory Industrial Strategy Council ensures that the strategy won’t be derailed by political shifts or short-term thinking. For SMEs, this means they can plan with confidence, whether it’s hiring new staff, investing in equipment, or launching a new product line.

Challenges to Watch

Of course, no strategy is a silver bullet. SMEs will still need to navigate:

• Eligibility and Access: Not all funding or support will be automatically available. SMEs must be proactive in applying, networking, and demonstrating their growth potential.
• Digital Transformation: While the strategy supports tech adoption, many SMEs still lack the infrastructure or expertise to fully embrace digital tools. Upskilling and partnerships will be key.
• Regulatory Complexity: Even with promised simplifications, navigating sector-specific regulations, especially in life sciences or defence, can be daunting.

 A Shared Endeavour

The government has made it clear: Invest 2035 is not a top-down directive. It’s a collaborative effort involving businesses, local authorities, trade unions, and academia. SMEs are encouraged to participate in consultations, share their experiences, and help shape sector plans that are tailored to their specific needs.

Invest 2035: Our Final Thoughts

For innovative SMEs, Invest 2035 is more than a policy document, it’s a roadmap to relevance, resilience, and growth. It recognises the outsized role that small firms play in driving innovation, creating jobs, and solving complex challenges.

But like any opportunity, it requires action. SMEs must engage, adapt, and invest in their own capabilities to fully benefit from what’s on offer.

If you’re an SME that would like to discuss your innovation projects and what Invest 2035 might mean for you, get in touch with our TBAT grant funding experts today.