In his first speech as chancellor, John Healey emphasized the central role that innovation must play in addressing Britain’s persistent economic growth challenges. Despite the country’s rich scientific heritage and capabilities, productivity growth has stagnated at an average of just 0.4 percent annually, lagging far behind the United States, where it is expanding at 1.9 percent. Healey outlined a vision for a 10-year strategy focused on fostering start-ups that can scale to become internationally competitive firms, which he described as vital to bridging this productivity gap.

Britain maintains a strong global position in scientific research, ranking second globally in output per capita for scientific papers and hosting four of the world’s top ten universities. The country has made significant contributions in advanced fields such as mRNA vaccines, AlphaFold protein folding technology, precision medicine, robotic surgery, and artificial intelligence applications in cancer detection. It is also at the forefront of emerging environmental technologies including carbon capture, hydrogen fuel cells, and floating offshore wind energy. Furthermore, Britain holds promising prospects in cutting-edge areas such as AI, quantum computing, and synthetic biology.

Healey highlighted that innovation opportunities extend beyond the well-known Golden Triangle region of Oxford, Cambridge, and London. The northern regions of England, which house several top-tier research institutions, alongside Scotland’s clusters in precision medicine and space technology, could provide a foundation for widespread economic revitalization. However, he warned against relying solely on either unregulated market forces or demand-focused Keynesian policies, arguing instead for a balanced approach centered on partnerships among inventors, investors, industry, and government.

This approach calls for increased targeted public investment in research and development, infrastructure, and skills, combined with incentives to attract private capital into sectors ranging from medicine to renewables and advanced manufacturing. Despite tight fiscal conditions, Healey urged that the upcoming Budget include measures to close a £15 billion investment gap identified by the ScaleUp Institute. Proposed solutions include encouraging larger, more risk-tolerant capital markets, reforming stock listing regulations, and leveraging public funds such as the British Business Bank and the National Wealth Fund to provide equity stakes in promising scale-up companies.

International collaboration was also highlighted as essential, with a suggestion to negotiate British participation in European investment initiatives like the Scale-up Europe fund. Additionally, improvements in management practices and a stronger pro-competition regulatory environment favoring new market entrants are seen as necessary to facilitate the diffusion of innovation throughout the economy.

Healey pointed to regional disparities, noting that many of the UK’s fastest-growing export-oriented clusters—in sectors such as machine manufacturing, chemicals, and minerals—are located in historically disadvantaged areas of the North East, Midlands, and Wales. Efforts to stimulate inclusive growth must also address what has been described as a severe underutilization of talent, particularly among women, ethnic minorities, and individuals from lower-income backgrounds. Between 2015 and 2020, only 7 percent of UK patent applications were filed by women, highlighting the scale of this untapped resource.

Emphasizing the risk of pursuing re-industrialization without concurrent innovation policies, Healey concluded that Britain must leverage its scientific expertise, investment capital, and competitive markets to not only invent but also develop, scale, and maintain ownership of new technologies if it hopes to achieve sustained economic growth.