Top stocks that could flourish under Labour's industrial strategy blueprint
Leverage the UK's Booming Economy: Where to Invest for Maximum Gain
The British government's 10-year blueprint, aptly named the Industrial Strategy, aims to create a conducive environment for businesses to flourish. By making it swifter, simpler, and cheaper to operate within the UK, the government is setting its sights on a whopping 1.1 million new jobs in burgeoning industries. But which businesses and sectors could score big from this revamped economic strategy?
"Promoting enterprise investment and creating high-paying jobs in thriving sectors" – that's how the government unveiled its Industrial Strategy on June 23.
Dan Coatsworth, an investment analyst at wealth firm AJ Bell, sheds light on one of the policy's standout features – potentially slashing energy costs by up to 25% for around 7,000 manufacturing industries from 2027, covering everything from aerospace to chemicals.
"Lower energy bills translate into fatter profit margins, which in turn could spur group earnings and provide share price boosts," Coatsworth suggests. Rolls-Royce, a renowned aircraft engine manufacturer, and Chemicals giant Croda might find themselves in the winner's circle for this reason, according to Coatsworth. As the market values these companies, their upward share price movements post-strategy announcement underscore their potential to gain from this policy.
What about the UK stock market?
The UK stock market was already performing exceptionally well before the latest reboot of the Industrial Strategy. In the first half of 2025, the UK has emerged as one of the top global performers for investors, as per AJ Bell's analysis.
"Investors could have pocketed more than four times their money invested in the UK stock market compared to the US so far this year. The FTSE 100 has delivered a solid 9.6% return, including dividends, while the S&P 500 has managed a modest 2.1%," states Coatsworth.
The FTSE 100 is home to stocks investors usually flock to during uncertain periods – stocks with defensive qualities that can weather economic storms. Industries like tobacco and telecoms consistently deliver stable earnings via thick-and-thin market conditions, as evidenced by heavyweights like British American Tobacco and BT performing exceptionally well in 2025.
But which UK companies can look forward to success in the years ahead, thanks to the Industrial Strategy? The government aims to develop a prosperous economy over the next ten years – a time horizon that fund managers and financial advisors typically recommend.
We tapped Susannah Streeter, head of money and markets at Hargreaves Lansdown, to point out her picks for the UK stock market heavyweights.
The best UK stocks to invest in
Chemicals – Croda
Croda, a company that produces chemical ingredients for industrial applications and life sciences, is likely to benefit from the UK's Industrial Strategy owing to energy cost reductions and support for the sectors they serve. With solid investor sentiment and nimble capabilities to bring products to market quickly, Croda stands ready to make the most of the changes brought in by the Industrial Strategy.
Aerospace – Rolls-Royce
Aerospace is at the heart of Rolls Royce's domain, covering both the civilian and military sectors. The Industrial Strategy includes space as well, opening up opportunities for Rolls Royce to excel in lunar and deep space missions, thanks to its Novel Nuclear program. It has already been selected as the favored bidder by Great British Nuclear in a contest to develop Small Modular Reactor (SMR) technology in the UK. As the UK commits to boosting defense spending to 3.5% of GDP and an additional 1.5% in security provisions, Rolls Royce appears poised to reap the benefits of future government contracts and support. However, investors should bear in mind that a significant portion of potential gains is already factored into Rolls Royce's share price.
Renewables – Greencoat wind
By building a more robust supply chain and improving grid connections for clean energy technologies, including wind energy, the government aims to create a more effective and cost-efficient renewable energy sector. Greencoat wind, a leading renewable energy infrastructure trust, might find renewed investor interest owing to shifting sentiments toward renewable investments as the world inches closer to its net-zero targets.
Construction – Balfour Beatty
Pledges to enhance national infrastructure, as mentioned in the Industrial Strategy, will boost Balfour Beatty, a company that finances, develops, and delivers projects across various infrastructure landscapes. Their extensive involvement in transportation, power, and utility systems – sectors earmarked for improvements under the strategy – positions Balfour Beatty to gain from these initiatives.
Housebuilders – Taylor Wimpey
The government's intent to streamline planning processes and fast-track urban brownfield sites for development should aid companies like Taylor Wimpey, which possess a sizable land bank and are now well-positioned to capitalize on less burdensome approval processes and rising demand.
Brickmaker Ibstock
Ibstock, a brick manufacturer, has faced a tough couple of years amid high mortgage rates and construction sector uncertainty. However, Streeter believes that early signs suggest we've turned a corner. Strengthening demand and the government's focus on speeding up planning processes could benefit Ibstock by enabling them to improve their production efficiency and lower costs.
Banks – NatWest and Lloyds
With the long-term revitalization plan for major sectors in place, there's optimism that increased activity could lead to a modest boost in GDP. This could provide a lift to UK-focused banks like NatWest and Lloyds, which are often viewed as barometers for the UK economy.
- Investors might find attractive opportunities in the UK stock market, given its impressive performance in 2025, and potential gains from the Industrial Strategy announced by the government.
- The potential 25% reduction in energy costs for various manufacturing industries could improve profit margins, and in turn, boost share prices of companies like Rolls-Royce and Croda, both active in aerospace and chemicals respectively.
- Amid the government's focus on improving infrastructure and renewable energy, companies such as Greencoat wind, Balfour Beatty, Taylor Wimpey, Ibstock, and UK-focused banks like NatWest and Lloyds could see growth, particularly in the new economic landscape set by the Industrial Strategy.
