The warning follows a roundtable at Loughborough University bringing together leaders from Tata Steel, BAE Systems, Rolls-Royce, AWE, Brush, The MTC and Boal Group, alongside Loughborough MP Jeevun Sandher.
A key message from the discussion was clear: the UK is strong at innovation, but weak at turning it into commercial success.
Business representatives at the event said promising companies are still being forced overseas to scale due to gaps in capital, infrastructure and domestic manufacturing capacity. Funding systems were criticised as too rigid and short-term, leaving high-potential firms stuck between early-stage innovation and full industrial deployment.
Attendees to the event also highlighted a lack of government-led demand to pull new technologies through to market. Compared to countries such as Japan and South Korea, the UK was seen as underusing procurement through sectors like defence and the NHS to drive innovation and growth.
Regional inequality emerged as another major barrier for businesses and innovation. Companies outside devolved regions reported limited access to funding and unclear long-term strategies, with calls for faster devolution and a more consistent national approach.
The UK’s skills system was also described as a drag on growth. Employers pointed to ongoing shortages in digital and AI skills, unclear technical career pathways and a fragmented training landscape that makes it difficult to access talent.
Despite this, opportunities remain strong—particularly in defence and advanced manufacturing.
Dr Jeevun Sandher MP, Member of Parliament for Loughborough, Shepshed and the Villages, said of the event: "This roundtable at Loughborough University proved something I have been making the case for since I was elected. We are already one of the country's most productive manufacturing geographies, with Loughborough University as our research anchor, and a supply base of businesses that have been innovating, exporting and creating skilled jobs for decades.
"What I heard from the room was clear. Local businesses need investment that reaches them, skills pathways that lead to real jobs in our region, and a place-based industrial strategy that treats the East Midlands as the cluster it already is.
"As PPS for the Department for Business and Trade, my job is to make sure those voices land where decisions are made. I will be taking the conclusions of this discussion directly back to the Secretary of State for Business and Trade and the Minister of Industry.
"I am grateful to Professor Anish Roy and Loughborough University for convening, and to every business that joined us. More money in our region, more skilled jobs for our people, more reasons to be proud of what we make here."
Professor Anish Roy, Associate Dean for Research and Innovation, said: "Today's roundtable brought together the people who will actually build the UK's advanced manufacturing future, the primes, foundational industries, SMEs, the Catapults, government, and the East Midlands supply base, in one room.
"What emerged was not a wish list. It was a clear, shared diagnosis: the UK has the ambition and the funding envelope. What it needs now is execution: the skills pipeline, the scale-up capacity, the sovereign supply chain, and a credible way to unlock funds for SMEs with a place-based delivery to match.
"Loughborough is investing in manufacturing, digital engineering, supply-chain research and systems engineering because we intend to be a serious part of that answer. We are ready to anchor the East Midlands regionally, align ourselves with the Industrial Strategy and do it in genuine partnership with industry and government.
"I am grateful to Dr Jeevun Sandher MP for co-chairing, and to every attendee who gave their time. The conversation that started today does not end today."
The message from industry was consistent: without coordinated action across government, business and academia, the UK risks falling behind in the global race for investment, innovation and industrial growth.