What’s Britain good at?

New knowledge drives progress. For centuries Britain often led the way. Thomas Newcomen and James Watt created the steam engine. Edward Jenner pioneered the vaccine. Ada Lovelace wrote the first computer program. Today, claims of Britain being world-beating can sound desperate, as it struggles to convince even its own firms that prospects are anything but gloomy. Rumours of AstraZeneca, a pharma giant, moving its listing to New York don’t help.

Yet Britain remains a place where ideas spark—in this lies its potential for revival. It is home to four of the world’s top universities. One, Cambridge, sits in the centre of the densest innovation cluster on Earth, according to the World Intellectual Property Organisation’s Global Innovation Index. This century Britain has created some 178 unicorns, reckons Dealroom, a data provider—more than France, Germany and Switzerland combined (see chart). Its venture-capital market is Europe’s largest. Consider three of Britain’s strengths: advanced manufacturing, life sciences and technology.

The country’s global share of manufacturing has declined over the years. Yet firms like Rolls-Royce, which has long been a leading producer of jet engines for wide-bodied planes, continue to fly high. Using its “UltraFan” technology, a geared turbofan with carbon-fibre blades, ceramic composites and 3D-printed parts, Rolls-Royce hopes to re-enter the larger market for single-aisle aircraft, aiming to power smaller jets more efficiently. Its alumni are spreading that spirit of innovation. Itxaso Ariza, formerly chief engineer in its aerospace division, is now at Tokamak Energy, a British firm working on nuclear fusion.

Britain also leads in making the materials of the future. In 2010 two scientists at the University of Manchester won the Nobel prize in chemistry for discovering graphene, a form of carbon only one atom thick. The nanomaterial could soon be used in high-altitude balloons to launch satellites. Others are already aiming higher still. Space Forge, a Welsh startup backed by nato’s innovation fund, hopes to become the first company to manufacture semiconductors in orbit (the theory being that low gravity and cold temperatures make space ideal for a chip factory).

Life sciences are another area of strength. Two of the world’s top pharma firms are British. GlaxoSmithKline once led in innovation; now AstraZeneca, the UK’s largest listed company (at least for now), invests heavily in genomics, oncology and artificial intelligence (AI). Britain is “well ahead of most of the US” in training scientists who understand biology and computation, says Chris Gibson, boss of Recursion Pharmaceuticals, an American drug-discovery firm. He should know: Recursion recently merged with Exscientia, its British rival and the first firm to bring AI-designed molecules into clinical trials.

Perhaps the most significant recent biochemistry breakthrough has been the development of AlphaFold, a program that can predict three-dimensional protein structures. For their work on it, Demis Hassabis and John Jumper of DeepMind, Google’s AI company, won half of the Nobel prize for chemistry last year. DeepMind was a British company until the tech giant bought it in 2014.

Hence the third area of strength: technology. Britain will never have the data centres or computing power to compete with America and China. But it does have deep expertise in machine learning, and firms eager to deploy ai. Wayve, a startup that recently raised over $1bn—the largest-ever investment in a European AI firm—worked out that the best approach to autonomous driving is to have an ai learn human driving patterns on its own. Many graduates of Palantir, an American data firm that employs a quarter of its staff in London, go on to found their own startups. One such spin-out is Arondite, which uses ai as the “connective tissue” between disparate defence systems. Both Wayve and Arondite are based near King’s Cross—the nascent tech hub in London that DeepMind still calls home.

Britain is also learning to pair technology with its strengths in services. Proximity to the City has already helped fintech firms like Revolut, one of the world’s largest challenger banks, to flourish. A new marriage of technology with legal services might do the same. And as a world leader in video games, Britain excels in combining creativity with code.

To fully realise these strengths, however, Britain must improve its track record in scaling and retaining high-growth firms. Being bought by foreign investors is one thing, but seeing firms leave Britain’s shores because they feel they cannot continue to grow there is quite another. Too often Britain serves as a launchpad for world-class companies—and in some cases not even that. After being informed that there are no launch slots available at British spaceports in 2025, Skyrora, a Scottish space firm, is now considering launching its rockets from Australia.

Above all, halting the exodus will require a shift in the national mindset. Britain thinks too small. The government talks up growth, but does little to bring down crippling industrial energy costs. Entrepreneurs face what Lady Stowell, who recently led a review on scaling startups, calls “a spaghetti of schemes” to pick through while “drowning in an alphabet soup” of regulators. And for all their flair, many British innovators aim merely to grow large enough to be bought—rather than to build truly world-beating companies. If Britain is to realise its potential, it must first learn to see its own worth. ■