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UK priority sector market overview

Priority sectors

Aerospace and space

The United Kingdom (UK) has a dynamic, innovative aerospace sector and is positioning itself to stay at the forefront of new aviation technologies, maintaining an annual turnover of $27bn on average with around 68% attributed to civil aviation and 32% to defence.

The industry is also seeing the benefits of a closer industry-government partnership with joint funding going towards technological innovation.

Like Canada's aerospace sector, the UK focuses on high value engineering, innovation as well as advanced manufacturing and services.

Specific opportunities for Canadian aerospace companies are in areas that can support production of:

Space

The UK's space sector continues to grow, accounting for 5.1% of the global space economy. The UK has recently launched their National Space Strategy, setting out their long-term plans to strengthen the UK's position as a leading space nation. This approach plans to boost private investment and to capitalise on UK strengths such as satellite manufacturing, design and operation, downstream analytics, space launch, and a strong science and technology development base.

The memorandum of understanding between the UK Space Agency and Canadian Space Agency provides a framework for enhanced bilateral collaboration between the UK and Canada on space activities.

Agriculture and agri-food

The UK food supply chain employs 4.2 million people and generates over £115 billion of added value for the economy each year. The UK imports around 40 percent of the total food it consumes and is reliant on both imports and its agricultural sector to feed itself and drive economic growth.

In 2021, the UK was Canada's largest export destination within Europe for agri-food products.

Top exports from Canada are:

The UK is a priority market for wine exports and there is interest in craft beer and spirits.

Key trends in the UK include plant-based foods, vegetarian and vegan, and convenience and snacking. E-commerce and online grocery shopping is continuing to rise.

Arts and cultural industries

The UK is recognized as a global leader in the creative industries. A priority sector for economic growth in the UK, the creative industries are a global British success story growing at more than 1.5 times the rate of the wider economy over the past decade. There were 2.4 million filled jobs in the UK creative industries in 2022, a 14.1% rise since 2019 which is well ahead of the average 0.6% increase across all UK jobs. The creative industries contribute $184 billion CAD in gross value added (GVA) annually to the UK economy.

In June 2023, the UK Government announced the Creative Industries Sector Vision backed by $129 million in new investment with the aim of growing the sector even further.

The UK was Canada's second largest creative export partner in 2021 ($491.7M), and the largest in Europe, with Canada's exports to the UK growing 10.5% between 2010-21, and quickly rebounding from the global pandemic. Top subsectors for export to the UK are film and TV, design and fashion, performing arts, music, and interactive media.

Defence and security

The UK's defence sector is one of the largest defence exporters in the world.

In 2021 and 2022, the UK spent £45.9 billion on defence. This was £3.6 billion higher than the previous year.

The UK has committed a further £2.5 billion in 24/25, an increase of £200 million on the previous two years.

Defence and Security Equipment International (DSEI) is one of the largest defence tradeshows in the world and offers an excellent opportunity for Canadian companies to promote their defence products and services to the UK and other foreign militaries.

The UK's security sector is shaped by a shifting domestic policy agenda, rapid technological change, as well as new and emerging international security challenges. Turnover continues to increase year on year, reaching £23.4bn in 2023 with a growth of 189% over the last 10 years. Along with that exports are up to £10.5bn with capabilities split between digital and physical.

It covers a wide spectrum of sub-sectors, ranging from cyber security to products and services that address terrorism threats and all other aspects of national security.

Education

The UK remains home to over 150 higher education institutions and is well-regarded for the quality of its education-system at all levels.

The UK presents an increasing number of opportunities for Canadian institutions looking to develop international partnerships.

As the UK's education sector has shifted post-Brexit, UK students continue to look abroad and Canada remains a top-ten destination for study, presenting low-cost, high quality study options with clear and desirable post-graduation visa pathways.

For UK higher education institutions seeking to diversify international partnerships, Canada provides unique mobility options and world-renowned R&D infrastructure.

Approximately half of all education technology (EdTech) investment in Europe is in the UK, making it the 4th largest EdTech space globally.

Energy and clean technology

In 2021, Canada's energy sector directly employed more than 264,000 people, indirectly supported over 369,500 jobs, and accounted for approximately 9.7% of nominal Gross Domestic Product (GDP). Energy exports totaled CAD $154.3 billion, while imports reached CAD $42.6 billion. The sector in the UK accounted for 2.5% of Gross Value Added (GVA) and directly employed 175,000 people in 2021.

Energy continues to be a key driver for trade, investment, and innovation in Canada and the UK, with both countries undertaking a fundamental transition towards a low carbon future. To drive this transition, both countries have legislated net-zero targets by 2050. The requirement to drastically reduce emissions and achieve decarbonisation targets is creating significant commercial opportunities. Canada-UK trade in environmental and clean technology goods and services reached CAD $724.3 million in 2021, with Canada exporting CAD $406.4 million in environmental and clean technology goods and services to the UK.

Since 2021, the UK has released multiple policy documents setting out pathways to decarbonisation across industry committing to reduce emissions by 78% by 2035 (compared to 1990 levels). Additionally, there are ambitious targets in place, including the ban on the sale of petrol and diesel vehicles by 2030, and a fully decarbonized electricity system by 2035.

Over the past decade, government support and private sector investment has resulted in the UK developing the 2nd largest capacity of offshore wind in the world. Currently at just over 13.6GW of operational offshore wind capacity (enough to power 7.5 million homes), Britain's Energy Security Strategy, published in April 2022, increased ambitions to 50 GW deployed offshore wind by 2030, including 5GW of floating offshore wind.

In May 2023, the UK Government announced a target to increase solar capacity to 70GW by 2035. Currently there is just over 14GW of solar deployed. The transition to intermittent renewables is bringing with it significant changes to grid infrastructure requirements, increased demand for energy storage, and other supply chain opportunities.

The path towards decarbonizing the electricity system and banning petrol and diesel vehicles is also driving the UK's approach to critical mineral supply chains. The need to build resiliency and ensure secure and stable supply chains is top of the UK government's agenda with the UK releasing a Critical Minerals Strategy in 2022. In March 2023, Canada and the UK signed the Critical Minerals Supply Chain Dialogue.

Key additional areas of opportunity are:

Financial and insurance services

The UK has one of the largest financial industry sectors in the world, ranking second behind New York in the World Financial Centre rankings.

The UK influences capital deployment and foreign direct investment (FDI) across global markets and other UK economic sectors domestically.

This is through all investment vehicles such as:

The UK has a robust professional services market that supports the financial services sector in the areas of:

The UK's single regulatory body, supportive government, large innovation ecosystem, and a highly educated and diverse workforce has resulted in a thriving financial technology sector.

The fintech sector is the second largest globally after the US with key strengths in:

The fintech sector is well supported by venture and corporate capital.

Information and communications technology (ICT)

ICT businesses are at the heart of the UK economy with a turnover of $300bn while sustaining 1.68 million jobs. In 2023, while the headlines were dominated by artificial intelligence (AI), it was a year of continuing but moderated growth for UK technology adoption across many businesses. The investment outlook for 2024 demonstrates the strength and potential of the UK tech ecosystem.

With 30 significant technology clusters across the UK, there are significant opportunities for Canadian exporters, especially for innovations in:

Technology adoption at UK Corporations and Government has been driven by digital transformation to undertake:

Canadian technology companies possessing strong capabilities that meet the UK's needs in these growing areas of digital transformation can play an important supply, or partnership, role and should consider the UK market for export development.

Infrastructure

Canada and the UK have a shared commitment to infrastructure as a foundation for economic growth and social cohesion, and both have made this central to their respective post Covid-19 recoveries. The last National Infrastructure Strategy published in 2020 provides a long-term perspective for the sector, including over CAD $1.1 trillion in projected investment over the following ten years. The pipeline is updated annually through the Infrastructure and Construction Pipeline. The infrastructure and construction sector are also a key part of the UK's effort to decarbonize its economy. Key areas of opportunity include:

Life sciences

The UK is home to one of the world's strongest and most productive life science economies and a significant market for medical devices, Health IT, and related technologies. The UK life sciences market has evolved over the past few years providing both challenges and opportunities for Canadian companies.

As health and social care spending continue to rise, opportunities across these sectors exist for innovative Canadian companies to export to the UK market.

Companies with proven digital health technologies that facilitate independent living, distant monitoring and diagnosis as well as enabling patients to be cared for outside the usual primary and secondary care pathways will benefit from upcoming government investments and initiatives across the UK regions. The National Health Service (NHS) is initiating various pathways, platforms, and entry points for companies to introduce their technologies. There is a push for the NHS to use more robots, to use AI and to evolve into a digital friendly organisation.

The laws governing drug discovery pathways and clinical trials are currently under review with a view to altering these to make UK more competitive globally and an even greater hub for conducting research and development. The National Institute for Health and Care Research (NIHR) facilitates entry of innovative companies into the NHS and conduct trials as well as pilot studies. It is setting up of satellite offices across Canada, the first international destination, for its global expansion.

The experience of the UK regulator during the pandemic has set expectations high for an overhaul of human clinical trials process as well as related approval routes.

The aim is to make Britain an attractive investment location for pharmaceutical companies, for raising capital and for conducting research and development through to human trials.

Canadian companies that are already using UK as a launch pad into the rest of Europe will benefit from such changes, but those looking for new investments and a faster route to market should be on the lookout for upcoming changes.

Water and wastewater

The UK water sector is unique. Both potable and wastewater is controlled by 26 privatized water utilities operating in geographic monopolies. The utilities are subject to high levels of regulation through Water Services Regulation Authority (OFWAT), the government regulator who set water rates often dependent on utilities ability to improve their performance levels across a range of indicators on a five-year cycle. This has pushed utilities to proactively seek innovations to improve their business and operations through:

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