Key facts
- Eight sectors identified as having high growth potential in Labour's industrial strategy have seen job losses.
- Employment in these sectors fell by 0.6% in 2025 compared to the previous year.
- The UK's unemployment rate rose to 4.9% between mid-2024 and late 2025.
- Employers attribute job market difficulties partly to a £25bn tax increase on employers' national insurance contributions.
- Productivity within these sectors rose by 3%, and exports increased.
Eight sectors identified by the UK government as having high growth potential have experienced job losses in 2025, according to a report seen by City AM. These 'IS-8' sectors, including life sciences, financial services, and defence, were central to Labour's industrial strategy aimed at creating 1.1 million new jobs by 2035.
The annual report from the former Department of Business and Trade found that employment across these sectors fell by 0.6% in 2025 compared to the previous year. This trend aligns with a broader increase in the UK's unemployment rate, which rose to 4.9% between mid-2024 and late 2025, representing approximately 200,000 more people out of work.
Conservative shadow business secretary Andrew Griffith described the figures as "damning," attributing job losses to Labour's policies, including a "jobs tax" (increased employers' national insurance contributions) and high energy prices. Employers widely blamed former Chancellor Rachel Reeves' £25bn tax increase on national insurance for the troubles in the UK jobs market.
Despite the job losses, the analysis of performance metrics showed a 3% jump in productivity across the eight sectors, with higher goods and services exports. The government also identified only 26 large, domestic businesses as part of the IS-8 initiative.
Some economists have flagged professional services and creative industries within the IS-8 as vulnerable to AI-driven job displacement, with the OECD noting London's particular risk due to its strength in these areas. A government spokesperson asserted that the industrial strategy is providing certainty and stability, attracting around £380bn in private investment since its launch, and Skills England estimates over a million priority jobs could be created by 2035.