Labour's industrial strategy has seven potential stock market winners

Taking advantage of public support for specific private projects can be accomplished by investing on the coattails of government ambition

The government's 10-year industrial strategy aims to encourage enterprise investment to make doing business in the UK faster, easier, and less expensive. But which businesses and industries stand to gain the most from the most recent change in Labour's growth strategy?

On 23 June, the government unveiled its industrial strategy, stating that it was "giving businesses the confidence to invest and create 1.1 million good, well-paid jobs in thriving industries."

One of the most striking aspects of the UK strategy, according to Dan Coatsworth, investment analyst at wealth firm AJ Bell, is the commitment to reduce energy costs by up to 25% for up to 7,000 manufacturing industries starting in 2027, including chemicals and aerospace.

He stated, "Higher profit margins should result from lower energy costs, which could increase group earnings and possibly act as catalysts for share price increases."

For that reason alone, Coatsworth noted, the industrial strategy could benefit companies like chemicals giant Croda and aircraft engine manufacturer Rolls-Royce.

Due to the increase in share price since the strategy was announced, the market has already identified them as possible winners.

How is the UK stock market doing?

Even before the government's industrial shake-up, UK stocks were already experiencing some success. In the first half of 2025, the UK was among the top-performing regions in the world for investors, according to AJ Bell's analysis.

"Investors could have profited from the UK stock market more than four times as much as they have from the US stock market thus far this year. According to Coatsworth, the SandP 500 has only returned 2 points, while the FTSE 100 has returned 9 points, including dividends.

With a first half year full of tariff wars and then actual wars, the FTSE 100 is full of the kinds of stocks that attract investors when the world is uncertain.

"Defensive businesses are highly sought after by investors, and the UK market is a great place to find them," Coatsworth stated.

Businesses like British American Tobacco and BT have been among the top-performing UK shares this year because they should generate consistent profits regardless of global events.

However, which UK companies stand to benefit from the new industrial strategy in the future? The government's plan is for ten years, which is just the kind of medium-term investing time horizon that fund managers and financial advisers encourage (though possibly not the same length of time the government itself will last).

We asked Susannah Streeter, head of markets and money at Hargreaves Lansdown, to select her picks for the UK stock market's top performers.

See our separate guide for the most well-liked funds to invest in.

Which stocks in the UK might be worthwhile to purchase?

Croda Chemicals.

Croda creates and provides chemical ingredients for the life sciences and industrial applications, two sectors that are prioritized in the UK's industrial strategy. The government policy is expected to help Croda by lowering energy costs and supporting the industries it supplies, Streeter stated.

Streeter noted that Croda has seen a slight improvement in investor sentiment following a successful first quarter. He added that Croda has demonstrated agility in launching products and should be well-positioned to benefit from the changes brought about by the industrial strategy because of its extensive manufacturing footprint and capacity to cultivate good R&D-based relationships with clients.

Rolls Royce in aerospace.

The industrial strategy encompasses both civilian and military sectors, including aerospace, which is at the core of Rolls-Royce's wheelhouse. "Space is also a focus, and Rolls Royce could benefit here given its Novel Nuclear program, which focuses on developing micro-nuclear reactors for deep space and lunar missions," Streeter said.

Great British Nuclear has already chosen it as the preferred bidder in a competition to develop Small Modular Reactor (SMR) technology in the United Kingdom. Rolls-Royce looks well-positioned to gain from future government contracts and support, Streeter said, "but investors should be mindful that plenty of upside has already been priced into shares." This is in addition to the UK's long-term commitment to increase defense spending to 3 percent of GDP and allocate an additional 1 percent to security provision.

Greencoat Wind Renewables.

Developing a stronger supply chain and better grid connections for clean energy technologies, such as wind energy, is a component of the industrial strategy. Suppliers may benefit from more economical and efficient operations as a result, and the industry's emphasis on upskilling employees may also help address a labor shortage.

Greencoat Wind is a sizable renewable energy infrastructure trust that has had difficulties recently as public perception of the industry has deteriorated, in part because borrowing is expensive in an era of high interest rates. "As the net zero target dates approach and the government has made clean energy a focus of its industrial strategy, there are some hopes Greencoat will be able to benefit from a change in investor attitudes towards renewable investments," Streeter stated.

Want to expand your investments in clean energy? Check out our guide to the best sustainable funds.

Balfour Beatty Construction.

Transportation power and utility systems are just two examples of the infrastructure projects that Balfour Beatty finances, develops, and completes. Balfour Beatty should benefit from pledges to upgrade national infrastructure, such as clean energy and transportation systems, as part of the industrial strategy, according to Streeter. The public sector should profit from the government-led infrastructure boost since it accounts for more than 95% of future orders in its UK business.

Builders Taylor Wimpey.

Businesses like Taylor Wimpey, which have been hindered by slow project approvals, should benefit from the government's efforts to shake up the planning system and expedite the development of urban brownfield sites.

"The company is prepared to capitalize on a reduction in red tape and an increase in demand because it has a strong land bank," Streeter stated. Housebuilders were in a difficult position during the period of higher interest rates, but this is beginning to change as more interest rates are anticipated.

Ibstock's bricklaying.

Ibstock, a brickmaker, has had a difficult couple of years. Streeter noted that high mortgage rates have been making housing more expensive and making builders cautious about beginning new projects. But she believes there are early indications that we've made progress. The government's commitment to expediting the planning process, which it is concentrating on, in conjunction with the industrial strategy, should aid in the recovery of confidence and activity in the homebuilding market.

"Ibstock currently has the UK's largest brick-making capacity, and improvements to other locations should help bring down average production costs. That implies that if demand actually picks up again, the group may be in a better position to profit from it," Streeter stated.

Lloyds and NatWest are banks.

It is anticipated that, if the infrastructure road map is implemented, the increase in activity will result in a slight increase in GDP. According to Streeter, "this may help UK-focused banks like NatWest and Lloyds, which are seen as bellwethers for the UK economy."