Boosting high-tech manufacturing and innovation is the best chance to save the British economy, says the government's innovation agency.
The National Endowment for Science, Technology and the Arts (Nesta) explored four economic scenarios related to boosting the manufacturing sector.
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In a report it found across the board innovation would produce economic growth rates of 3.2% a year and an additional 2.7 million jobs by 2020. This would also boost the high-tech manufacturing sector and business services would enjoy growth rates of 4.4% and 6.7% a year respectively.
Focusing only on the high-tech sector would cut growth to 3% annually, but create 2.4 million new jobs.
Closing half the gap with Germany or Finland (ie increasing manufacturing's contribution to the economy to 15% per year would require an average annual growth rate of 6.2%, a rate not seen since the immediate post-ware period, Nesta said.
However, it would result in 400,000 new companies by 2020 and an increase in the UK's workforce by 4.1million. This "would be extremely difficult to achieve in the context of the UK's skills base", Nesta said.
Nesta CEO Jonathan Kestenbaum said a full-blooded revival of the wider manufacturing sector was wishful thinking.
"Our analysis puts paid to the notion that a broad-based manufacturing renaissance will drive recovery. Instead, it shows that a recovery based on high technology and innovation offers the best prospect for growth," he said.
The Business as Usual scenario, with continued reliance on financial and business services, meant no new growth until 2013, Nesta said.